Andrew Favorov: Production strategy must be economically reasonable

Nov 11, 2019 | Category: Official
Andrew Favorov: Production strategy must be economically reasonable

“The industry needs no cubic meters of gas at whatever the cost. The industry needs much money to extract these cubic meters from the soil. It is a relevant issue both for the state companies and private business," Andrew Favorov, the Director for Integrated Gas Business, Naftogaz Ukraine, pointed out during panel discussion at the Kyiv International Economic Forum held on November 8, this year.

Focusing on the production wells that will make a maximum effect with minimum costs, investing more in geophysics and seismic are the steps that will provide for improving the gas production economy.

Mr. Favorov compared the fields of Ukrgasvydobuvannya depleted by more than 80% with the squeezed lemon and emphasized that in such a situation, it was challenging to make a considerable and quick breakdown in the increase of the Ukrainian gas production volumes. For the last five years, the Company has made numerous efforts to maintain the baseline production of blue flame natural gas.

 But according to Mr. Favorov, now is the time to make the foundation for the industry's future development. "We welcome and support the decision of the Government concerning the introduction of a transparent mechanism for receipt of special permits. For the last 12 months, a greater number of auctions have been held than for the last five years. However, the result from new blocks can be obtained only in 3-4 years. Till that time, we will improve the efficiency of the available fields due to more accurate geological risk assessment and expanded reserves analytics."

Additional information

The resource portfolio of Ukrgasvydobuvannya counts 142 fields, 75% of which are depleted by 87%. Every year, the Company invests money to limit the natural decline that makes more than 1.5 bln. cub.m.