Ukraine Reveals Hydrocarbon Potential Both Onshore and Offshore That Attracts National as Well as International Players

The Ukraine is a net energy importer. The main imports are oil and natural gas, primarily from Russia. In 1998, the Ukraine imported an estimated 344,000 bpd of oil and almost 2.0 tcf of natural gas. The primary domestic energy resources include coal and nuclear power.

Ukraine contains proven oil reserves of 395 mm barrels, most of them located in the Dnieper-Donets basin, the major oil and gas producing region located in the eastern part of the country. The oldest producing region is the Precarpathian Basin, located in western Ukraine. Over the last 20 years, the country's oil production has declined by more than 60 %.

Much of the decline was due to the Soviet Union's diversion of resources to develop oil reserves in Siberia, combined with insufficient investment in Ukraine's oil sector since its independence in 1991. Ukraine currently imports nearly 80 % of its oil, almost all of which comes from Russia. In 1998, Ukraine produced 81,000 bpd, down from a peak of approximately 279,000 bpd in the mid-1970s, and consumed 425,000 bpd.

Naftogaz reported that oil production declined by 5 % during the first quarter of 1999, attributing the decline to Ukraine's economic problems and declining oil deposits. In early 1998, President Kuchma created Naftogaz Ukrainy, a company formed by uniting state-owned oil and gas companies and establishing a single state-owned oil and gas company.

Naftogaz Ukrainy controls oil and gas production and marketing, as well as the national oil and gas pipeline network, one of the country's largest sources of revenue. Since President Kuchma has future plans to privatise Naftogaz Ukrainy itself, the creation of the company was seen as an attempt to circumvent parliament's 1995 ban on privatising state oil and gas companies.

However, in July 1998, parliament passed legislation barring the transfer of government stakes in oil and gas companies to the newly created Naftogaz Ukrainy, and banned government agencies from turning oil and gas sector enterprises into shareholding companies. President Kuchma responded in August 1998 by refusing to sign the legislation and by calling on parliament to repeal the law.

We produced a oil and gas report to give an overview of Ukraine Geological outline and give an overview of what information is available for screening, exploration and/ or farm-in/-out processes. This report can be found on www.lulu.com/stig together with another oil and gas report made by us.

Ukraine is regarded as a good location for business for minor-medium sized oil and gas companies.
A large variety of plays with a large range of risks and reward opportunities in Ukraine.
The main factor to evaluate is the validity and accessibility to documentation and data in order to reach a satisfactory decision for the planned activity.
Since Ukraine is a large country, there is a large variation of basins to evaluate, and there is difference in exploration and production maturity, and also a large variation in costs associated with both exploration and production, since it varies from on-shore (flat and high lands) to off-shore (both shallow marine to deep waters).

Ukraine has developed its national program "Oil and gas of Ukraine to the year 2010" to meet at least half of the country's oil and gas needs within the next 11 to 12 years. Under this plan, foreign investment will be used to finance the majority of this effort. For the most part, foreign investment in Ukraine's oil and gas sectors has been limited to joint venture agreements rather than privatisation.

If you find this information of interest to you, either contact the author directly on
sak@ec-ba.com or go to
www.lulu.com/stig
to download the reports you can find there.
The report contains vital energy information about Ukraine, also contact information to authorities and to both local and international oil and gas companies operating in Ukraine at the moment.