In the coming years, Ukraine intends to start developing the Black Sea shelf, which, if the efforts see success, will add some 10-15 billion cubic meters of gas to annual output stats and make the country energy-independent.
Unfortunately, today, Ukraine is unable to pull off such an ambitious project on its own. The government needs billions of dollars in investments, as well as some more advanced technology.
Naftogaz is actively looking for partners
Therefore, National Joint Stock Company Naftogaz of Ukraine, granted by the government in late 2020 the right to explore and produce oil and gas on the Black Sea shelf, is actively looking for partners who would provide funding, technology, and experience to successfully implement the project.
The first company whose interest Naftogaz was able to draw was a Romanian firm OMV Petrom, where 51% of the stakes belong to Austria-based OMV, the largest energy company in Central Europe.
Ukrainian state energy holding has signed with their Romanian partner a memorandum of cooperation on gas exploration and production.
The agreement calls for the parties to analyse cooperation opportunities in promising oil and gas areas in the Ukrainian part of the Black Sea, which may lead to concluding more serious agreements on the joint development of the Ukrainian shelf.
Both parties will benefit from participation. Naftogaz gets one of the leading European energy companies as a partner, which will simplify attracting other potential investors and also accelerate project implementation.
Romania's involvement significantly reduces the risks associated with the Russian military presence in the region
Moreover, Romania is a NATO Ally and an EU member state, therefore, the involvement of a Romanian company in the project significantly reduces the risks associated with the Russian military presence in the region. In 2014, Russia occupied the Crimean peninsula and seized part of Ukraine's Black Sea shelf, as well as grabbed Ukrainian offshore drilling platforms.
In turn, OMV is expanding its presence in the Black Sea basin, which is in line with the company's strategy, also gaining access to one of the largest gas reserves in the said water area. According to various estimates, forecast resources on this part of the Ukrainian shelf amount to a whopping 1-2 trillion cubic meters of gas.
Besides, OMV Petrom has already received the right to explore and produce hydrocarbons on the Black Sea shelf of Georgia and Bulgaria.
In addition, back in 2012, the Romanian company together with the U.S.-based ExxonMobil discovered a large gas field 170 km off the coast of Romania on the Neptune block. From 2008 to 2016, companies invested $ 1.5 billion in exploration work in this block.
However, in 2019, amid changes in Romania's tax legislation and plunging gas prices, ExxonMobil, which had invested in Neptune some t $750 million, announced its intention to withdraw.
Global businesses are losing interest in hydrocarbon production in the Black Sea
That is, Romania, just like Ukraine, is faced with the fact that the world's largest oil and gas companies are losing interest in hydrocarbon production in the Black Sea.
Whereas for the region's countries, the development of the sea shelf remains a strategic task, the implementation of which can make Russia's energy dominance in Eastern Europe a thing of the past.
Therefore, it is extremely important that Ukraine boost its efforts in the international arena to involve in a large-scale project as many countries of the region as possible – the ones that today share the same problem of dependence on energy imports, primarily from Russia.
It's not only about the countries of the Black Sea basin, but also countries such as Poland, which in recent years has been trying to reduce dependence of its economy on Russian gas.
Joint implementation of energy and infrastructure projects will allow, economically and politically, to bring Ukraine closer to its neighbors, members of the European Union.
Rallying the countries of Eastern and Central Europe around the implementation of important economic projects could make the region more resilient in the face of external challenges, which is especially important today, as Russia's anti-European rhetoric is becoming more and more aggressive.
Ukraine is called to be the driver of these processes
Ukraine, which suffered from its northern neighbor's aggression more than others, can't allow itself taking a passive stance; it is called upon to be the driver of these processes, offering its neighbors projects that would unite the countries of the Baltic-Black Sea region and contribute to their overall economic development.
Joint development of the Black Sea shelf may become the first, and most ambitious, of such initiatives.