Ukrgazvydobuvannia signs PEC contract with Expert Petroleum for 15 years to raise gas production in Western Ukraine
JSC Ukrgazvydobuvannia, following the results of a tender, has signed a production enhancement contract (PEC) with Expert Petroleum for 15 years on a comprehensive increase in gas production on the company's fields in Western Ukraine, the press service of the Naftogaz group has said.
"Within the first ever full-scale production enhancement contract in the history of Ukraine's oil and gas industry, the Western partner has committed to about UAH 1 billion (conversion of $30 million, based on the forecast course) into intensification, drilling and development of infrastructure in the first five years of cooperation and, potentially, make additional investments after that. Partnership between Naftogaz and Expert Petroleum will generate at least an additional 300 million cubic meters of gas within five years from 13 small fields in Western Ukraine," Naftogaz said in a press release.
"International partnerships developing is one of the key vectors of Naftogaz' transformation program. The agreement assumes the largest foreign investment in Ukraine's gas production over the last 5 years. This money will be directed into development of those small-size depleted fields for which Naftogaz does not have enough own resources under the circumstance of significant drop in prices for energy resources," Naftogaz Group's Chief Transformation Officer Otto Waterlander said.
"The contract between Expert Petroleum and Ukrgazvydobuvannia is concluded for 15 years, with the possibility of extension for another 10 years. To execute this contract and its related services, Expert Petroleum has registered a dedicated Ukrainian company which will be a party to the contract. Naftogaz Group will approve the development plans, annual work program and budget, proposed by the operator company on these fields. The operator will receive a fixed fee for support of the baseline production (at the level of current operating costs of Ukrgazvydobuvannia, taking into account the inflation component) and for achieving incremental production. The full ownership of the extracted production, geological licenses and existing assets will remain with Ukrgazvydobuvannia," the report says.