September 27, 2018

Lessons Learned From Odessa Offshore Conference 2018

In May 2016 Ukraine declared that in four years its own gas extraction will reach 20 billion cbm of gas. There is no doubt that diversification of energy resources combined with increased energy efficiency both in private and public sectors as well as increase of its own gas production would positively influence economic development in Ukraine, which in many years was dependent on import of gas from Russia. The biggest gas producer in Ukraine, UGV, has done a lot to keep the gas extraction from old fields on the same level and to explore new fields, which helped the company to increase its own production by approximately 5% in 2017. However, already at the end of 2018, we can say that it is not possible to reach strategy 2020 by UGVs efforts only. There should be a combination of political will on the highest level, transparency in license management, new investments and equal rules for all gas extractors in Ukraine for “strategy 2020” to become a reality.

To increase gas production Ukrainian extractors should work in two directions at the same time – first to maintain old fields to keep the level of extraction at least on the same level as before, and second – to invest into the discovery of new fields. In this relation, the exploration of offshore on the Black Sea with its 18 283.89  mil cbm of gas can be a real game changer. According to the managing director of Black Sea Oil & Gas SRL, Mark Beacom, offshore development on the Black Sea shelf helped Romania to become the gas exporter. This is something Ukraine can definitely learn from Romania since Ukraine has access to the Black Sea shelf but at the same time has neither enough experience in offshore nor special equipment. As of today, 90% of all service companies in oil and gas sectors are Ukrainian, though this can change when offshore sector development starts. We in NUCC also believe that the number of Norwegian service companies can play a role in the development of Ukrainian offshore with its unique technologies and long-term experience.

Last week, Ukrainian and international companies gathered in Odesa to participate in Odesa Offshore Conference 2018 and to exchange ideas about the development of offshore sector near Odesa. According to State Geology Service (SGS), Ukraine is in progress of the preparation of 16 offshore licenses and two of them are going to be distributed through tenders already at the end of this year.

The decision about the mechanism of distribution of rest 14 licenses is to be taken by the government soon. The acting head of the SGS, Oleg Kyryliuk, mentioned that they have removed the requirement for approval of offshore production with regional councils, which will make the procedure of getting licenses in the Black Sea less bureaucratic. In addition, the new law about transparency in extractive industries was adopted on 18th of September which will be crucial on the road to transparency and accountability in the country’s oil, gas and mining sectors.

NUCC is encouraged to see all the reforms that the Ukrainian energy market is going through and becoming more transparent and therefore attractive for international and Norwegian companies, in particular, to invest in. We believe that recent progress in the offshore field should also give positive signals to Norwegian companies to start exploring Ukraine as a market. We in NUCC, in our turn, are ready to help new Norwegian companies to find their partners in Ukraine.

Anatolii Kyryliuk

Project Manager, the Energy sector

Pictures: ExPro Gas&Oil

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