Ukraine should cut rent for gas extraction in new wells to 12%

"We need to reduce rental payments for new wells, for new gas, and reduce this rent to 12% next year.This will be a good contribution to the higher pace of gas extraction," the head of government said.

Groysman has added that in December the Cabinet will adopt a number of changes to government regulations in order to deregulate oil and gas industry.

"There are still those who’ve been blocking [the process] and trying to create obstacles... We will succeed in deregulation. At one of the government meetings in December, we will adopt changes to the rules, aimed at deregulating this sphere, which will allow us to move quickly," the prime minister said.

Read alsoEBRD cheers progress as Ukraine replaces Naftogaz board - ReutersHe believes deregulation will increase gas output and in the future provide for the halt of gas imports.

"We need to replace the imported (even European) gas with our own fuel. We can do it. We require deregulation to this end. We need to "resuscitate" agencies that issue permits because they often abuse their authority," said Groysman.

As UNIAN reported earlier, in mid-September 2016 a bill was tabled in the Verkhovna Rada proposing to reduce the rent for gas production from the current level (29%) to 12% starting 2017. The norm was to be applied only to new wells. According to the executive director of the Association of Gas Producers, Roman Opimakh, the adoption of this bill should create incentives for drilling new wells and would allow increasing gas output from early 2017.

Read alsoThe Hill: Ukraine enlists firm to lobby against Russian gas pipelineOn December 6, 2016, the bill was voted in the first reading. On December 18, the amendment on the introduction of a 12% rent was abolished at a meeting of the parliamentary Committee on Tax and Customs Policy. In the second reading on December 20, the norm was completely rejected.

In early October 2017, the Ministry of Energy expressed support for the rent cut initiative.

Read alsoNaftogaz boosts profits to almost UAH 31 blnOver the 10 months of 2017 compared with the same period last year, Ukraine has increased gas output by 3%, to 17.3 billion cubic meters.