Ukrgasvydobuvannya, a member of the Naftogaz of Ukraine group, Vermilion Ukraine Exploration, and a subsidiary of the Canadian oil and gas company Vermilion Energy, have submitted joint applications for participation in 2 competitions for the conclusion of hydrocarbon sharing agreements (PSA), which will be produced in Hrunivska and Okhtyrska fields.
Hrunivska field is located within Sumy and Poltava regions; its total area is 1082.95 km2. Okhtyrska field is located on the territory of Sumy, Poltava and Kharkiv regions; its total area is 672 km2.
"To increase gas production in Ukraine, we require to make a bet on new projects, new technologies, new competencies. Naftogaz of Ukraine systematically works in this direction, involving world-class partners, this is our second participation in competitions for the PSA conclusion, together with one of the best and most effective experts in hydrocarbon exploration, the Canadian company Vermilion Energy. The first experience was successful, and we are looking forward to the transparency and openness of the current competitions. Our joint application uniqueness lies in the combination of the best Ukrainian practices and modern Western approaches that Vermilion can bring. We have common values and common goals – to discover new fields, implement unique projects in Ukraine, bring it closer to energy independence", concluded Andrew Favorov, Director for Integrated Gas Business Division at NJSC Naftogaz of Ukraine.
The competition results are expected within a month. In case of victory and successful negotiations with the government of Ukraine, Ukrgasvydobuvannya and Vermilion are obliged to make investments and distribute earned incomes in the ratio of 50 to 50. According to the agreements, the work operator at the geological exploration stage of the site will be Vermilion. Ukrgasvydobuvannya will have the pre-emptive right to provide its services and execute works for Vermilion, in particular drilling rigs and other services, subject to conformity with industry standards and competitiveness. The partners will undertake significant obligations to involve Ukrainian specialists.
At the geologic exploration activity stage, at least 50% of domestic personnel will be involved in the works, at the development stage - at least 75%.
As reported, in June 2019, Ukrgasvydobuvannya, together with Vermilion, became the winners of 2 competitions for the production sharing agreement conclusion – at Balakliyska and Ivankivska sites. Also, Ukrgasvydobuvannya became the winner of the competitions in 2 more locations (Berestyansky and Buzivsky). Now the companies are negotiating the relevant agreements with the government of Ukraine. The partners plan to begin the preparation works at these sites as early as 2020.
Additional information
Vermilion Energy is an international oil and gas company whose shares are listed on the New York and the Toronto stock exchanges. Its activities are concentrated in three central regions: North America (Canada, USA), Europe (France, the Netherlands, Germany, Ireland, Croatia, Hungary, Slovakia) and Australia. The company has considerable experience and technologies in the hydrocarbon production on land and sea, and in particular of semi-traditional and non-traditional deposits.
