Private gas producers "threatened" authorities reduction extraction of raw materials

The high rate of subsoil use in the future may lead to a reduction in revenue, according to private market operators 

 

Increasing tax rates will lead to unprofitable subsoil exploration and deep gas production, according to market participants private gas production. This was referred to in a letter to the companies, "Geo-Alliance", "Burisma", "Kub-Gas", "Tisagaz", "Naftogazvydobuvannya", "Smart Energy" Poltava Petroleum Company and the Prime Minister Arseniy Yatsenyuk, head of the Parliamentary Committee on energy Nikolai Martynenko and led the Parliamentary Committee on taxation and Customs Policy Vitaly Homutynnik the draft Law of Ukraine №4309a providing growth rates of subsoil use for private companies to 70%. 

 

Market participants note that gas does not involve excessive profits in the amount of 700-1500%, as the cost of gas production vary depending on the conditions and methods of mining. 

 

They also point to the fact that the draft law does not meet the European standards of taxation. "One of the [...] should be to increase production of its own gas. However, the bill increases the rate of payment for use of mineral resources to unprecedented levels in Europe" - said in the letter. The document stated that a similar rate in European countries does not exceed 20%, while the project is proposed to establish it at the level of 70%. 

 

In general, market participants indicate a possible stop market gas production due to reduced profits for private companies. "Because of the virtual absence of profit private gas companies will not be able to finance the development and mining, drilling of new wells and conduct additional research. This will inevitably lead to a halt development of the industry as a whole" - warn "signers". 

 

According to the registered in the Verkhovna Rada government bill (№4309a), when calculating the fee subsoil actual price of gas produced in the country are invited to use the ceiling prices for natural gas sold to industrial customers, which establishes the National Commission, carrying out state regulation in the energy sector (NERC). 

 

Currently, as the actual price of the country's gas when calculating fees for subsoil use average customs value of imported natural gas. Authors of the bill №4309a offer increased rates for subsoil use for gas, which is not implemented for the needs of the population to 70%, regardless of the depth of its production. 

 

At present rates of payment for use of mineral resources in natural gas production, which is not implemented for the needs of the population, represent 28% of the cost of gas at a depth of 5 km and 15% of its value from a depth of more than 5 km. At the same time, the rate of payment for use of mineral resources in natural gas production for the needs of the population proposed to be retained at the current level of 20% of the cost of gas at a depth of 5 km and 14% of its value from a depth of more than 5 km. It is also proposed not to revise the rate of payment for the use of mineral resources in natural gas production on the shelf (11%). 

 

Natural gas production in Ukraine in January-June 2014 increased compared to the same period of 2013 by 1.3% - up to 9.8 billion cubic meters. Natural gas production in Ukraine in 2013 increased compared to 2012 by 1.7% - to 20.4 billion cubic meters. The share of private gas producers account for about 25% of the total annual volume of produced hydrocarbons. 

 

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