REUTERS
The Cabinet of Ministers is looking into the causes behind the failure of the government's 20/20 Program.
Ukrainian Minister of Energy and Environmental Protection Oleksiy Orzhel says the government is unhappy with NJSC Naftogaz of Ukraine's updated gas production strategy, according to which gas production efficiency is measured by economic indicators rather than by cubic meters of natural gas produced.
"The government is frankly disappointed with the results of the 20/20 Program [to boost annual gas production to 20 billion cubic meters (bcm) by 2020] and disappointed with Naftogaz's proposal regarding a change in the gas production strategy. Moreover, there is a decision by the [Naftogaz] Supervisory Board suggesting assessment of [the company's performance] based on economic indicators rather than on increased [gas] production volumes," he said during a Q&A hour in the Verkhovna Rada on February 7.
Read alsoUkraine's Cabinet expects further cut in gas prices – energy minister
According to Orzhel, the Cabinet is also investigating the causes behind the failure of the government's 20/20 Program, which envisaged an annual increase in gas output by Ukraine's largest natural gas producer, Ukrgazvydobuvannya, by 2020 to 20 bcm.
"Investment decisions were made in 2016-2017, when the price of gas was really different. And we would have got the result now and increased our own production, royalties, and most importantly, the country's energy security. These indicators have not been met," the minister summed up.
As UNIAN reported earlier, the government's 20/20 Program provided for Ukrgazvydobuvannya's annual output boost up to 20 bcm of gas by 2020. To this end, it was planned to increase drilling of new wells and intensify production at existing ones.
However, the company had not received the relevant licenses for exploring new fields, which significantly affected the implementation of the plan.
In July 2019, Naftogaz introduced a new gas production strategy, according to which the company will focus funding on intensification of production at efficient fields, while the program success will be evaluated based on the company's financial results, rather than cubic meters of natural gas extracted.