17:27 28.11.2017

Ukraine should not wait for foreign investment in development of mineral deposits with current royalties – Ukrgazvydobuvannia head

KYIV. Nov 28 (Interfax-Ukraine) – Ukraine should not wait for foreign investment in drilling and development of gas production due to the existing level of deposit use royalties, Head of public joint-stock company Ukrgazvydobuvannia Oleh Prokhorenko at a press conference at Interfax-Ukraine on Tuesday.

He said that today the royalty rates for fossil fuel in the country are the highest in Europe, which pushes off investors from bringing money to gas production.

"At least a ticket should be bought to see investors coming [allusion to a joke about a lottery ticket]. The ticket means relaxation [of permits] and the reduction of royalties. If we have a low royalty, we would have something to say to investors," he said.

Prokhorenko said that Ukrgazvydobuvannia could develop gas tight sand fields, but gas production at them requires special technologies and with the existing royalty this is unviable.

"With 29% and 14% royalties we cannot produce this gas with economic viability. Ukraine buys gas in those countries which cut the royalty and allow producing this gas. This should be changed," he said.

Executive Director of the Association of Gas Producers of Ukraine Roman Opimakh expressed hope that the Cabinet of Ministers with support of lawmakers would make all the required changes to the government's bill amending the Tax Code of Ukraine.

"We hope that these changes would at least foresee stimulation of drilling of new wells, and the highest rate will be 12%," he said.

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