In 2015, Ukraine produced 19.9 bcm of gas compared to 20.5 bcm in 2014 (a 0.6 bcm or 3% decline).
The volume of gas produced by UGV, a Naftogaz fully-owned subsidiary, decreased by 4% in 2015 – from 15.1 to 14.5 bcm (including volumes produced by joint ventures and gas used for operating needs by the company).
UGV output volume decline was caused primarily by the temporary loss of control over assets in the occupied areas of Donbas (185 mcm/y), as well as by a significant underinvestment in exploration and drilling for a number of years.
The resource base of UGV has been exhausted: during eight years from 2007 to 2014, only 4 special exploration permits were received instead of the required amount of approximately 100. During the previous three years, the company produced about 45 bcm of gas, while reserves increased by only 29 bcm instead of the best-practice benchmark of approximately 150 bcm.
In 2015, UGV received 20 special permits and increased volumes of seismic work fivefold. Due to the growth in regulated sales prices revenues and measures to enhance financial efficiency undertaken by the new management, the company managed to build up production and drilling works, as well as to commission three boosting compressor stations. The implementation of this emergency program enabled UGV to prevent a larger decline in production in 2015. The company management intends to increase the output to 20 bcm/y by 2020 under the program “Strategy 20/20”.
The entire volume of the marketable gas produced by entities controlled by UGV was purchased by Naftogaz and supplied for the needs of Ukrainian households at prices set by the state.
Volumes of natural gas production by UGV, bcm
|- marketable gas (for households)||13.4||12.9|
|- joint ventures||1.1||1.1|
|- own operating needs||0.6||0.5|
In 2015, Ukrnafta (51% owned by Naftogaz) reduced gas production by 13%, from 1.7 to 1.5 bcm.
At the same time, private producers increased their production by 17%, from 3.3 to 3.9 bcm.
Because of the occupation of Crimea and Sevastopol by the Russian Federation in 2014, Ukraine did not receive gas from Naftogaz 100% owned subsidiary Chornomornaftogaz in 2015. During the first two months of 2014, 0.3 bcm of gas was produced by the company (1.7 bcm during 12 months of 2013).
Note: Numbers may not add up due to rounding.