Cabinet inks production sharing agreements with oil and gas producers for seven sites

The Cabinet of Ministers of Ukraine has signed production sharing agreements (PSAs) with a number of companies for seven oil and gas production sites.

The signing ceremony, attended by Prime Minister Denys Shmyhal, took place on December 31, according to the Energy Ministry's press service.

On behalf of the Ministry, the agreements were signed by Deputy Minister Yuriy Boyko. The deals were signed for seven sites: Berestiansky, Ivankivsky, Buzovsky, Balakleisky, Uhnivsky, Sofiyivsky, and Zynkivsky.

PM says the signing is an important step toward the country's energy independence and energy self-sufficiency, since the development of these fields will help significantly increase own gas production.

Read alsoZelensky elaborates on advantages of state suppliers of natural gas for householdsAccording to the agreements signed, Ukraine hands the right to a private investor to explore and produce minerals in a specific area for a certain period. The investor, for its part, undertakes, at its own expense, to perform the assigned work with subsequent compensation of expenses and receipt of payment in the form of a part of the profitable product.

Background

On July 1, 2019, the Interdepartmental Commission designated the winners of the tender for concluding production sharing agreements (PSA) regarding nine oil and gas production sites in Ukraine.

At the end of December 2020, the Cabinet signed the relevant orders to conclude PSAs for hydrocarbon production within the Berestiansky, Ivankivsky, Buzovsky, Balakleisky, Uhnivsky, Sofiyivsky, and Zynkivsky sites.

The state-owned Ukrgazvydobuvannya, together with the Canadian oil and gas producer Vermilion Energy, were granted the right to extract oil and gas at the Balakleisky and Ivankivsky sites.

Ukrgazvydobuvannya independently won the Berestiansky and Buzovsky sites.

Also, Ukraine Energy LLS won at the Varvynsky site, Oil and Gas Overseas Trading B.V. and Naftogazexpluatatsiya, co-founded by DTEK Oil & Gas B.V., won at the Zynkivsky site, a private oil and gas company Geo Alliance Partnership won at the Sofiyivsky area, and Well CO – at the Uhnivsky site.

The deposits are located in Ivano-Frankivsk, Lviv, Poltava, Chernihiv, Sumy, and Kharkiv regions.