Ukrgasvydobuvannya attracts partners to increase production at 35 depleted fields

Ukrgasvydobuvannya starts the second stage of attracting partners to increase gas production at depleted fields in the PEC format (Production Enhancement Contracts).

The company will competitively select partners for the development of 35 fields in Eastern and Central Ukraine.

35 depleted fields located in the Poltava, Kharkiv, Dnipropetrovsk, Donetsk, and Luhansk regions are grouped into four clusters. Ukrgasvydobuvannya plans to conclude four contracts with partners to enhance production at each of the clusters. The contracts provide for the partners’ investment attraction and operational management of production activities at the transferred fields.

The presentation of the new project details, including mechanisms for attracting partners, legal and financial aspects will be held on January 25 in Kyiv.

PEC-format cooperation has already proven efficiency in 13 fields in Western Ukraine. There, in April 2020, Ukrgasvydobuvannya engaged an international partner, Expert Petroleum, in the framework of a pilot project. The partner company over a year of operation has ensured production growth due to the implementation of the stimulation program, and reconstruction of the surface infrastructure.

"Having announced the PEC signing under the results of our first tender in April 2020, we told that if successful, we will expand such a cooperation mechanism to the other fields of the Company. Based on the results of the analysis of the first year of operations of our current partner, we see positive cooperation results. This includes both enhancing the efficiency of operational activities and administrative functions, fulfilling the terms of the contract regarding investment obligations and production volumes. To attract new partners, we have formed four clusters of the fields, and are starting the market sounding. We already see the interest of both domestic and international companies in our project, and we are ready for an open dialogue," Oleksander Romanyuk, Director of the Naftogaz Exploration and Production Division said.

The fields for the new project were selected and divided into clusters based on the criteria below:

– fields, which in reserves, production, and costs for development of the current reserves are no-priority for the use of the Company resources and in-house development;

– availability of the independent and self-sufficient surface infrastructure.

Attracting partners for production plans’ implementation at 35 fields will allow Naftogaz to unlock resources and focus its efforts on priority projects. The expectations are that future partners will plan and perform operations and works, including surface infrastructure development that will ensure an increase in hydrocarbon production on the beneficial terms for both parties.

Under the PEC, all produced gas and reserves will be put on the balance sheets of the Naftogaz production company, Ukrgasvydobuvannya JSC, which is and will remain the owner of the mineral rights for the fields. For its services, the partner company will receive payment depending on the rates set for different activities, including base production, production from stimulation operations in existing wells, and production from new wells.

The competition to attract partners will include two stages:

1. clarification of the terms of reference and market sounding: getting applications from the interested companies, providing access to such companies to the data room on 35 fields;

2. auctioning on the ProZorro electronic platform within the framework of the Public Procurement Law of Ukraine.

Please, follow the link for the detailed project terms.

To participate in the event on the presentation of the project terms, please, send an application by January 16, 2022, to the addresses below:

– for companies interested in participating in the project: [email protected];

– for media: [email protected]

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