12:26 25.06.2021

Naftogaz revises drilling plans to increase gas production - Vitrenko

2 min read
Naftogaz revises drilling plans to increase gas production - Vitrenko

NJSC Naftogaz Ukrainy is revising plans for drilling to increase natural gas production, chairman of the board Yuriy Vitrenko has said.

"First of all, we will increase production, and in the near future. For this, we are now revising our plans for drilling and carrying out appropriate work on the existing well stock," he said in an interview with Interfax-Ukraine.

According to Vitrenko, the current global trend towards an increase in hydrocarbon prices also contributes to the implementation of works and operations that previously did not make economic sense due to low prices.

"Moreover, we are reconsidering the approach, because earlier it was simplistic and incorrect. We looked at the payback period, artificial and too aggressive, which makes sense for small commercial, not large companies. Usually they look not at the payback period, but at discounted cash flow. This is a more complex simulation, but a more correct approach," he added.

Vitrenko also recalled that Naftogaz is a national state-owned company, so it should make more efforts to increase domestic production than private commercial companies.

"If for a private commercial company, drilling or doing some operations may not make economic sense, given the full amount of rent that must be paid, then it is clear for a national company that even if it does not achieve a positive economic effect on a separate well, taking into account the rent, there is still a positive effect for the state," the head of the company summed up.

As reported, Naftogaz plans to invest $7.3 billion in hydrocarbon production in 2021-2025, increasing its reserves by 1.8 times. At the same time, the share of investments in new fields from 2023 will exceed investments in those already explored. The group will not be able to independently finance the announced plans, therefore it is planned to involve third-party investors in the processes.

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