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Ukrainian energy ministry's initiative to transfer company’s largest fields to PSA unviable - Ukgazvydobuvannia head

Ukrainian energy ministry's initiative to transfer company’s largest fields to PSA unviable - Ukgazvydobuvannia headBoard Chairman of public joint-stock company Ukgazvydobuvannia Oleh Prokhorenko believes that the initiative of Ukraine's Energy and Coal Industry Ministry to separate the largest and best fields of the company for operation as part of the Product Sharing Agreements (PSA) is unviable.

"Statements of representatives of the ministry that they are considering Ukrgazvydobuvannia's largest fields make me uneasy… This means that a certain operator will come, allegedly an investor who will take the asset in which the state has invested billions [of hryvnias] and then it will use cash flow generated by these fields within any investment," he said at a press conference in Kyiv on Thursday.

He said that today at a roundtable organised by the parliamentary committee for fuel and energy complex Energy and Coal Industry Minister Ihor Nasalyk said that they proposed to bring up to five large fields operated by Ukrgazvydobuvannia to PSA. In particular, earlier the following fields were announced: Shebelynske, Yablunivske, Tymofiyivske, Kotelevske and Kobzovske fields.

Prokhorenko said that the company does not oppose PSA. It is ready to attract investment under this or similar mechanisms (PEC, production enhancement contracts), but this must be not the best fields the development of which Ukrgazvydobuvannia can finance itself.

"We are mulling [the possibility of attracting investment via PSA] mainly for exhausted fields or fields where it is head to extract deposits," he said.

He said that the key requirement to PSA must be the investment in basic exploration and development. This is a risky resource where the investor is ready to undertake geological risks.

He said that investors should be attracted at open tenders with approving the criteria for selecting fields and potential investors with Naftogaz Ukrainy's supervisory board.
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