On 30 May 2018, in accordance with laws of Ukraine, JSC UkrGasVydobuvannya was forced to stop extraction of hydrocarbons from the wells of the South Kolomatsky deposit. The stop is due to delay in the license re-registration.

And this at a time when the country, as never before, strongly needs energy independence, and gas companies began to show positive dynamics in gas production in 2017-2018. Every short-received cubic meter of gas only detracts us from the goal – Ukraine’s energy independence.

The daily production rate from the wells of the South Kolomatsky deposit as of May 30 of this year amounted to 30 thousand cubic meters of natural gas and 1 tonne of gas condensate. By the end of this year, the loss of hydrocarbons from this deposit will amount to over 6.42 million cubic meters of natural gas and over 210 tonnes of gas condensate.  

The extraction in the deposit has been suspended, since the validity of the special permit No. 2792 dated 31 May 2006 for subsoil use for the purpose of exploration, in particular, pilot commercial development of the South Kolomatsky site located in Kharkiv region, expired on 31 May 2018.

As early as December 2017, the Company filed a petition to the State Service of Geology and Mineral Resources of Ukraine with a package of documents for acquisition of special permit for the use of the subsoil of the South Kolomatsky deposit for a period of 20 years to extract hydrocarbons, but no decision on its granting has been taken yet.

During the term of special permit No. 2792, JSC UkrGasVydobuvannya drilled 4 wells for its own funds. In 2007, according to the testing results of the well No. 31 from the horizon C-5 of Verkhnyoserpukhivskyi sublayer of the Mississippian period the commercial gas inflow was obtained and the South Kolomatsky deposit was discovered.

In 2015, UGV, again at its own expense, carried out economic and geological evaluation of hydrocarbons reserves of the South Kolomatsky deposit in accordance with the law.

This is the first bad sign but this is not the only problem unfortunately. In general, UGV has not received yet from the State Service of Geology and Mineral Resources of Ukraine a decision on the renewal of 39 special permits for the extraction of hydrocarbons due to refusal of the Ministry of Ecology and Natural Resources and delay in the publication of amendments to the CMU Resolution No. 615, although all necessary materials concerning them were sent back in November 2017 – January 2018. Due to lack of letterheads of the extended special permits, the introduction of new wells into operation is blocked, which jeopardizes the implementation of the 20/20 Program and achievement of Ukraine’s energy independence.

For reference

Since December 2017, the Law of Ukraine on Environmental Impact Assessment (EIA) entered into force, according to which environmental impact assessment is strongly required for the extraction of minerals. Most of the bylaws that stipulate the direct EIA procedure were published and became effective at the end of December 2017 – early January 2018 only. At the same time, to date, not all bylaws have been adopted, which actually makes it impossible to carry out EIA in the regions. In addition, this procedure is long enough and takes at least 3-4 months.

In the draft amendments to the Resolution No. 615 on Approval of the Procedure of Granting Special Permits for the Subsoil Use approved by the Government on 25 April 2018, the said issue has been settled. However, this resolution has not been published yet, therefore, has not entered into force.

JSC UkrGasVydobuvannya encourages the Government to promptly publish the relevant Resolution No. 615 and unblock the acquisition and renewal of the special permits.