Sad anniversary for UkrGasVydobuvannya: sixty rejections from Poltava regional council during three years

Apr 16, 2018 | Category: Official
Sad anniversary for UkrGasVydobuvannya: sixty rejections from Poltava regional council during three years

On April 12, Poltava Regional Council refused PJSC UkrGasVydobuvannya in agreeing to expand the boundaries of two available special permits for the hydrocarbons extraction - on the Matviievske and Horobtsivsko-Vidradnenske gas condensate fields of Poltava region.

In connection with this refusal UkrGasVydobuvannya will not be able to drill 7 wells, which will lead to losses of gas extraction in 2020 in the amount of 124 million cubic meters.

“The sad anniversary was reached: since 2016 Poltava regional council has refused PJSC UkrGasVydobuvannya in agreeing of special permits for production properties and of expanding the boundaries of the available ones 60 times. Such actions of Poltava regional council are aimed at disrupting the implementation of the state program “20/20” aimed to increase the extraction of the Ukrainian gas, Oleh Prokhorenko, the UGV Chairman of the Board, noted.  

The actions of Poltava Regional Council lead to significant losses for the Ukrainian economy and for the welfare of the Poltava region. Thus, according to UGV calculations, in 2017-2020, because of refusals in agreeing on special permits for the subsoil use PJSC UkrGasVydobuvannya will receive about 3.3 billion cubic meters of gas less than its due. Rent owing and unpaid taxes will amount to UAH 4.9 billion to the national  budget and 135 million UAH specifically to the local budgets of Poltava region.

Only in 2018 UkrGasVydobuvannya will not be able to additionally produce up to 500 million cubic meters of gas, while budget revenues in Poltavshchyna will significantly decrease. These revenues could bring significant benefits in improving the regional infrastructure – hospitals, schools, roads and the like.

We remind that in 2018 UkrGasVydobuvannya has already sent UAH 59,300,000 of costs received from royalties to local budgets of various levels in Poltava region.

For reference 

At the beginning of 2017, the President of Ukraine Petro Poroshenko, signed the Law No. 1793-VIII “On Amendments to the Budget Code of Ukraine (regarding Improvement of the Proceeds and Use of Costs Received from Royalties for Subsoil Use for the Extraction of Oil, Natural Gas and Gas Condensate)”, adopted by the Verkhovna Rada on December 20, 2016 .

Under this Law, the communities, on whose territory the gas is being extracted, receive additional revenues to their budgets. Thus, 2% of the royalties from hydrocarbon production are directed to the regional budgets, 2% to district ones and 1% to local government budgets in accordance with the location (extraction site) of the relative natural resources.

The law came into force on January 1, 2018.