Companies do not invest in countries, companies invest in deals and sectors. To attract investments we have to find the most interesting sectors, to prove that this sectors worth investing and to set up an attractive market rules.
Gas upstream is one of such sectors. To achieve the goal set up by the government – gas independence – the sector requires $5-6 billion of investments and adoption of cutting-edge technologies in the next 4 years. This is only possible through close cooperation with our international partners and clearly demonstrating that extraction opportunity and business environment reliability are to be found in Ukraine.
Ukraine already has a significant position on the European gas market. In 2016 it was №1 by transit volume of Russian gas to the EU, №1 by capacity of underground gas storages, №3 in proven natural gas reserves and №4 by gas production volume. In 2017, 35 companies are importing gas to Ukraine, including state-owned Naftogaz, Engie, Axpo Trading, Trailstone, Eni, and RWE. The share of Naftogaz in the import structure is declining, which means that the market is becoming more attractive for international suppliers.
But Ukraine is rich not only in explored gas fields, but also in untapped potential reserves. The R/P ratio is close to 46 years, 2P reserves are equivalent to 20 years of current production – 924,1 bcm, and the total contingent resources of 5.6 tcm illustrate that there are very substantial discovered resources. This suggests that Ukraine has the geological potential not only to achieve energy self-sufficiency, but also to become a gas exporter.
A competitive gas market reform was started in 2014 and was named as one of the most successful reform by international community. Now Ukraine needs to implement a list of initiatives that will allow global industry players to enter the upstream market. The industry requires to open access to geological information, set an attractive tax regime and reduce the entry barriers for new investors. The implementation of these changes will become the important catalyst for the international upstream companies to enter Ukrainian market.
To explain the situation on the gas market, the Office of the National Investment Council launched a special report on gas upstream sector, covering key market regulation and roadmap to improve investment climate.
Yuliya Kovaliv is the head of the Office of the National Investment Council, a non-governmental organization that partners with government to lure investors to Ukraine.
