Ukraine’s Cabinet of Ministers on Dec. 18 approved the preparation of tenders for exploration and extraction rights to 12 additional onshore gas reserve sites, bringing the total amount of such sites to 42 this year.
The auctions will take place online through the state’s transparent bidding system Prozorro.
On Dec. 6, 10 blocks of land with hydrocarbon reserves were put up for electronic auction that will end in March 2019, while another 20 blocks were being readied for auction.
The long-awaited process of opening up the country’s natural gas production started by auctioning exploration and extraction rights, or production sharing agreements, for eight onshore reserve sites in the Dnipro-Donets region, one in the Pre-Carpathian basin and one on the coast of the Black Sea.
The tender terms announced on Dec. 18 are for 11 onshore blocks in the Dnipro-Donets Basin, situated primarily in Poltava and Kharkiv oblasts, and one additional site situated in the Pre-Carpathian basin, near Ivano-Frankivsk. The twelve sites cover a combined total of over 13,000 square kilometers of land.
Altogether, over 20,000 square kilometers of land blocks will be available for investors to explore and extract gas in Ukraine in 2019, according to the Association of Gas Producers of Ukraine.
Investors will have 90 days to submit their offers after the Ministry of Energy publishes a statement specifying the exact rules for each cluster.
The information provided by the Association of Gas Producers of Ukraine states that the total investment required for each site will range from Hr 450 million ($16 million) to Hr 1 billion ($36 million).
Ukraine produces only 20 billion cubic meters of gas each year, lagging behind countries like Myanmar, Bangladesh and Trinidad and Tobago, even though Ukraine has greater potential, with over 1.1 trillion cubic meters of proven reserves. The consensus among experts is that the much anticipated privatization of gas extraction sites will help Ukraine boost its energy independence.
Currently, UkrGasVydobuvannya, a subsidiary of the state-owned oil and gas monopoly Naftogaz, accounts for 75 percent of Ukraine’s natural gas extraction, with private owned companies extracting less than 20 percent of Ukraine’s natural gas each year.
