Ukraine may boost gas output to almost 22 bcm in 2018

Executive Director of the Association of Gas Producers Roman Opimakh predicts Ukraine may boost natural gas production by 7% in 2018, to 21.9 billion cubic meters (bcm) against 2017.

"We forecast gas production may increase by 7% on the average this year," he said at a press conference on Tuesday, January 30.

In 2017, gas production in Ukraine grew by 2.4%, to 20.5 bcm, the association said.

Read alsoUkraine owns huge gas resources, 5.5 tcm – expertOpimakh also noted that Ukraine's largest state-run gas producer PJSC Ukrgazvydobuvannia provided the major growth, having boosted gas output by 4.4% to 15.25 bcm.

"Unfortunately, another part of the market, i.e. private companies could not improve their performance and extracted 4.2 bcm of gas, which was 0.4% down from 2016," he added.

The official believes that the main factors of the growth in gas output in 2018 will be a reduction in royalties and the liberalization of regulatory procedures for the acquisition of land plots for drilling.

Read alsoNaftogaz expects to net penalties with Gazprom following Stockholm Arbitration awards"At the same time, the industry expects transparent and open auctions on new sites, simplification of geological information turnover, as well as the adoption of a new version of a natural resources code, which will take into account European standards," Opimakh said.

As UNIAN reported earlier, on December 8, 2017, the Verkhovna Rada, Ukraine's parliament, reduced royalties for natural gas production in new wells from 29% to 12% (the depth is up to 5,000 meters) and from 14% to 6% (the depth is over 5,000 meters).The rates came into force on January 1, 2018.

Moreover, the law on the transfer of 5% of royalties from natural gas production to the local budgets has been in effect since the beginning of 2018. It is expected to make the local authorities more interested in developing and supporting gas production in their regions.

On December 19, 2017, the Verkhovna Rada adopted draft law No. 3096 to amend some legislative acts of Ukraine to simplify access by oil and gas companies to land plots for geological prospecting and production of hydrocarbon.