Naftogaz continues to defend the right to promising oil and gas sites

Aug 31, 2020 | Category: Official
Naftogaz continues to defend the right to promising oil and gas sites

Naftogaz Group continues to defend its rights in connection with the revocation of special subsoil use permits for the Budyshchansko-Chutivska site, which was sold by the State Service of Geology and Subsoil of Ukraine to the other company at an open bidding today, as well as to two other sites - Obolonska and Pysarivska.  According to Naftogaz, in 2017, the State Service of Geology and Subsoil of Ukraine unreasonably issued an order, which became the basis for the revocation of the Company's special permits for these sites. The record-breaking price of 650.5 MUAH, for which the Budyshchansko-Chutivska site was sold on bids, indicates a high market assessment of the losses incurred by Naftogaz.

Over five years, from the late 2011, the Company invested almost 1,000.000.000 UAH in the development of these sites, of which more than 750,000.000 UAH accounted for the Budyshchansko-Chutivska site. In particular, on this site, Naftogaz completed a set of 3D seismic, gravimetric, magnetometric, and geochemical surveys, carried out a comprehensive reprocessing and reinterpretation of all available materials, drilled three production wells, which discovered three fields. The company has built integrated digital hydrodynamic models of the discovered fields and received confirmation of the estimated reserves of the discovered fields according to the SPE-PRMS system.

However, on March 13, 2017, the State Service of Geology and Subsoil of Ukraine issued order No. 124 on the suspension of the special permits issued to Naftogaz for the use of subsoil for the aforementioned sites without verifying the actual status of implementation of the scope of works as required by law. This order was based on the corresponding decision of the Poltava Regional Council, which contained no substantiations and supporting documents, but was grounded on unfounded and biased appeals of individual members of regional council.

In June 2020, the State Service of Geology and Subsoil of Ukraine announced its intention to set the Budyshchansko-Chutivska for an auction. Today it was sold for 650,500.000 UAH.

According to Naftogaz, the decision of the State Service of Geology and Subsoil of Ukraine to revoke the Company's special permits is unlawful. Currently, Naftogaz continues to challenge it in courts.