Naftogaz Will Lose 200 mcm of Gas due to Quarantine

Aug 4, 2020 | Category: Official
Naftogaz Will Lose 200 mcm of Gas due to Quarantine

JSC Ukrgasvydobuvannya, a member of Naftogaz Group, cannot start drilling operations on 11 new wells due to the lack of official permits from the state, which are required to fulfill the company's production plans amid the coronavirus pandemic. For this reason, Ukrgasvydobuvannya's potential daily losses are about 1 mcm of gas, let alone lost profit, which is a source for paying taxes and dividends to the Ukrainian budget.

In particular, Ukrgasvydobuvannya performed all the actions provided for by applicable laws as part of the environmental impact assessment (EIA). Specifically, back in February-March 2020, the company prepared all the necessary documents within the initiated EIA procedures and submitted them to the authorized bodies for approval.

However, given the situation caused by the coronavirus pandemic, as well as the imperfection of the current legislation in the field of EIA, the company has not been able to obtain appropriate approvals for several months already to commence work at a number of new facilities.

At the end of June, the Verkhovna Rada enacted bill No. 3438, which was supposed to resolve the situation. With the adoption and signing of the document, the procedure was to resume for assessing the impact on the environment, which had been blocked since the beginning of quarantine.

In fact, according to the new law, Ukrgasvydobuvannya is forced to repeatedly place the announcements about public discussions as part of previously prepared and published EIA reports, which will result in a significant delay in the commencement of work. It will take at least another 75 days to obtain the necessary permits.

Thus, given the time already lost, the company's total potential losses due to the inability to start drilling operations will amount to 200 mcm of gas.