13:44 29.07.2019

NSDC Secretary supports PM's initiative to launch new tender for PSA on Black Sea shelf

4 min read
NSDC Secretary supports PM's initiative to launch new tender for PSA on Black Sea shelf

National Security and Defense Council Secretary Oleksandr Danyliuk has supported the initiative of Prime Minister Volodymyr Groysman, who intends to propose Ukraine's Cabinet of Ministers review the possibility of announcing a new competition for developing hydrocarbon deposits in the Dolphin sector of the Black Sea shelf under the terms of a production-sharing agreement (PSA).

"The decision on the new competition for the shelf is definitely correct. This competition had to demonstrate that Ukraine is ready to leave 'under-the-rug' deals for processing its deposits. The main problem of the competition was the artificially constrained time limits for analyzing the deposits and preparing bids. Serious companies won't take part in such a competition. If new conditions are approved, it will be necessary to set time limits no less than six months," Danyliuk said on Facebook.

The NSDC Secretary said Ukraine's energy independence requires investments, but they require transparent and understandable rules.

In turn, Ilya Ponomarev, a shareholder in Trident Acquisitions Corp. (which is listed on the NASDAQ stock exchange), which was named by an interdepartmental commission under the Energy and Coal Minister as the winner in the contest, expressed doubts that international gas extraction companies would be ready to participate in a new tender.

"We said immediately that no major players would come to Ukraine and that there are several salient reasons for this. Firstly, no one who has significant assets in Russia (for example, Shell, ExxonMobil, Total, BP, Conoco, Chevron and others) will invest. Secondly, those companies, which five years ago decided to curtail activities in Ukraine (Shell, Exxon and Chevron), will not invest. And thirdly, big players will not invest in Ukraine because the size of possible projects for them is too small. For a company the size of ours, or Vermillion, which is a partner with Naftogaz, a $1 billion project is the largest possible requirement, but for Exxon it is the smallest," Ponomarev said on Facebook, commenting on Groysman's statement.

Ponomarev said major companies may in the future buy Ukrainian companies with production of more than 2-3 million tonnes of oil equivalent (toe), but they will not take the risks of creating them.

"I am sure that after studying all the materials of the interdepartmental commission, prepared by Energy and Coal Ministry experts, Groysman will want to enter history as the head of Ukraine's government who successfully attracted foreign subsoil developers to the country, who was able to attract a billion-dollar investment in the national economy, which created the first company investor in Ukraine that is traded on the prestigious international NASDAQ stock exchange," Ponomarev said.

As reported, the Cabinet of Ministers of Ukraine on April 12, 2019, announced a competition for the development of hydrocarbons within the Dolphin section on the Black Sea shelf under the terms of a production-sharing agreement (PSA). The term of the agreement is 50 years.

CEO and one of the shareholders of American Trident Acquisitions Corp. Ilya Ponomarev on July 26 announced that the interdepartmental commission under the Ministry of Energy and Coal recognized the company he headed as the winner of the competition, recalling that the decision should be approved by the Cabinet of Ministers.

Groysman on July 27 announced that he intends to offer the Cabinet to consider the possibility of announcing a new tender for the development of the said hydrocarbon section on the Black Sea shelf.

American Trident was established in March 2016 as a specialized purpose acquisition company (SPAC). In the middle of 2018, it conducted an IPO on the NASDAQ stock market, which resulted in raising $201.25 million. It was planned that these funds will be used to acquire energy assets in eastern Europe with a focus on Ukraine.

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