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Gas extraction in Ukraine is necessary to stimulate the legislative instruments

June 20 Energy Community Secretariat issued a monitoring report on the state of energy market reforms in Ukraine. The energy sector should be the key to the success of economic reforms in Ukraine. The opportunity for reform opened in the legislative field of Ukraine "On the natural gas market", such as the establishment of a market economically reasonable price for natural gas for all categories of consumers, increase energy security through diversification of natural gas supplies by expanding the capacity of reverse routes and build its own resource base . This claim European counterparts in the last report, the priority energy reforms noted in the government, and in the Verkhovna Rada.
The relevant energy sector reform plan was approved by the Cabinet of Ministers in March 2015 and included a lot of positive initiatives for the gas sector, of which only a portion was able to realize in the form adopted by the legal acts. Since the beginning of 2016 came into force on the Association Agreement with the EU, in the framework of what needs to be further phased implementation of some requirements of the EU directives and reforms in key sectors.
Among the priority areas of the primary sector is considered one of the most important, especially given the many years Ukraine's dependence on energy imports. But for the industry has ceased to be a burden on the shoulders of an already weak economy, and has become a profitable and attractive business investment, it is necessary to implement several immediate steps. According to the plan of priority actions of the government in 2016 - the reform of the natural gas market according to the requirements of the Third EU Energy Package.
The purpose - to create conditions for the sustainable development of the national gas production. In addition, comprehensive reform is another important goal - the introduction of energy efficiency tools. To date, the cities and municipalities account for about 75% of the consumption of energy resources. The share of natural gas imports to Ukraine are still high -. For the first quarter of 2016 nearly 3 billion m3, own gas production amounted to about 6.7 billion m3, of which the share of "Naftogaz Ukraine" -. 5.3 billion m3. . Natural gas consumption amounted to about 14.7 billion. m3 in the period. The figures clearly show that Ukraine is still far from meeting the demand of domestic consumers of natural gas to Ukrainian resource. And the balance of payments - that natural gas imports should gradually give way to trade on the Ukrainian market with its own resources.
Among the most adverse conditions: unstable fiscal policies, the lack of incentive and tax instability rules of the game. It is a solution to these priorities can allow in the next 4 - 5 years to reduce imports of natural gas to Ukraine. Speaking of any commodity market, you need to first of all take into account the possibility that receives the mining company or investor. This applies, above all, the opportunity to realize production. Complete liberalized natural gas market thought, but he was not in full measure realized. In 2015, the reform started, but a large number of legal acts that need to be developed "from scratch" and accept some reduced course of the natural gas market changes. So, in the Parliament "stuck" bills of Regulators, on the licensing of the redistribution of rent payments and others that can provide for all market participants transparent rules work and equal conditions for business activities in accordance with European standards.
In balancing the situation with the implementation of the norms of the EU directives, the cooperation of mining companies with local authorities and ensuring the transparency of mining companies designed to registered second half of June the draft law "On information disclosure in the extractive industries." He consistently combines the benefits of the Law of Ukraine "On the natural gas market" and the Law of Ukraine "On amendments to some legislative acts of Ukraine to promote transparency in the extractive industries."
Moreover, as stated by the profile committee of the Verkhovna Rada of Ukraine on energy matters, the bill could become a political tool for the quality of implementation of EU directives in the framework of the Association Agreement. In addition, there is no doubt that the mining sector lacks investments. And state-owned companies are not able to bring their own under the existing financial problems.
Negatively on the gas sector as a whole has affected the jump annuity rates, with the result that in 2015 Ukraine reduced gas production by 1.4% compared to 2014 year - up to 19.896 billion cubic meters.. m. For example, the gas company "Regal Petroleum" the deterioration of the financial performance of the company in 2015. And, according to the company, now on the long-term plans of the company was transferred to short-term investment programs. Only after the resumption of the level of rental rates in 2013 the company plans to continue geological and geophysical fields in 2016, to begin drilling one well and possibly start a repair of two wells. Small successes demonstrate other private gas companies.
During the 1st quarter 2016 natural gas production in Ukraine increased by 2.3% or 148.6 million cubic meters, compared with the same period in 2015 - up to 6 billion 716.6 million cubic meters. Private oil and gas companies in over this period increased gas production by 17.2% (to 203.4 million cub. m.) - up to 1 billion 388.1 million cubic meters. The largest gas producers are: PJSC "Naftogazvydobuvannya" - 510 380 000 cubic meters, LLC "Esko-Pivnich" - 226.051 million cub. m., PJSC "Ukrnaftoburinnya" - 111.657 million cub. m., PJSC "Natural Resources" - 75.57 million cub. m., "Cube-Gas" - 72.744 million cub. m., JV "Poltava gasonaftova company" - 62.22 million cub. m., PJSC "Devon" - 42.326 million cub. m., "First Ukrainian gasonaftova company" - 42.203 million cub. m., PJSC "Ukrgazvydobutok" - 39.875 million cub. m., "Energy 95" - 39.454 million cub. m., "Sistemoilinzheniring" - 28.723 million cub. m., "Nadra Geoinvest" - 26.232 million cub. m., "Regal Petroleum" - 22.525 mln cub. m., PJSC "Plast" - 13.21 million cub. m., "Prom-energy product" - 10.47 million cub. m., LLC "Sirius 1" - 9.2 million cub. m., "Nadra Geocenter" - 8.349 million cub. m., "Pari" - 7.58 million cub. m., PJSC "Tisagaz" - 6.694 million cub. m., LLC "Sakhalin" - 6.32 million cub. m., "Zahidnadraservis" - 6.057 million cub. m., "Ukrhaz Invest" - 5.722 million cub. m., "Arabic Energy Alliance" - 5.715 million cub. m. In this case, again somewhat deteriorated situation in the public sector. According to the Ministry of Energy and Mines, the company "Naftogaz Ukraine" for the 1st quarter 2016 reduced gas production by 1% or by 54.8 million. cub. m. - 5 billion 328.5 million cubic meters.
The success of private gas companies could be much better in the case of modernization of the legal framework, tax optimization and completion of the gas market reforms in line with European principles. Partly to improve the legislative field of the parliamentarians promised before the summer holidays, but a lot of work to develop a new system of taxation and a modern version of the Code on subsoil remains at the level of discussion in expert circles and working groups.
Storozhev Roman, President of Association "Subsoil Users of Ukraine"
"Energobusiness" on July 5, 2016