Main pageMediaArticlesThe head of the Association "Subsoil Users of Ukraine": In order to increase its own gas production Ukraine needs a qualitative change in the field of subsoil use

The head of the Association "Subsoil Users of Ukraine": In order to increase its own gas production Ukraine needs a qualitative change in the field of subsoil use

April 25, 2016
Ukrainian gas production does not hand over positions, and private companies for I quarter of 2016 increased the volume of recoverable resources. Thus, in January-March of this year, gas production in the private sector increased by 30% or 244 million. Cubic meters. meters of gas. The top three among private mining companies shared space "Neftegazdobycha", "Esko-North" from Burisma Holdings, and "Ukrnefteburenie". production growth was made possible by reducing the rent at the end of 2015 and unchanged demand in the domestic market for natural gas, which mining companies sold at market prices. Since the beginning of the year in Ukraine earned the gas market in the new law passed by Parliament a year ago, and under the terms of the new codes, the rules of gas and so on. New gas trading rules are more liberal, and partly an opportunity to compete with the NJSC "Naftogaz of Ukraine", which holds the monopoly supplier of gas industry for many years.
Developing gas production plan not only with the help of moderate fiscal policy. April 12, 2016 the Cabinet of Ministers issued a decree №277 of April 6, 2016 which simplified the control of approvals to obtain special permits for subsoil use. As promised the authors of the document, as a result of the process of auctions to attract private investment in the production of hydrocarbons will become more transparent, and will meet the world practice. In particular, the decree are included the procedures for passing documents and a decision about how to obtain special permits for subsoil use, cut the bottom of their receipt without an auction that will attract additional funds to the state budget. In addition to improving the procedure for conducting auctions in expert circles discussed the reform of the State Geological Service, responsible for the issuance of special permits. During the round table, which recently held a VRU Committee on Fuel and Energy Complex, submitted for public discussion service reform plan. So, experts, parliamentarians and officials of agencies were unanimous in their opinion that should be Gosgeonedr service department for subsoil users. While investors are "waiting reform" mode and still interested to take part in hydrocarbon production projects, Ukraine must show that it is ready to offer a complete solution for special-special permits for subsoil use to potential investors.
Estimation of investment situation shows that in recent years capital investment in industry decreased by 22.1%, with a 28.5% reduction in the volume of capital investments in the mining and quarrying. With these figures, our country occupies only 83 position in world rankings of investment attractiveness and ease of doing business among 189 countries. But without private investment Ukraine will not be able to cope with the problem of increasing hydrocarbon production. Therefore, you need to be reformed to become more attractive for investments in mining. Investors have the capital and if there is no change in the near future, potential investors will be looking for other hydrocarbon production markets, working conditions in which it is easier than in Ukraine. Problematic issues in the industry has accumulated a lot of subsoil use. First of all, there is a global sector strategy and plan of subsoil funding priorities. As noted previously the association "Ukrainian Subsoil Users' underfunding of geological prospecting works leads to the fact that the negative growth of reserves. In addition, one of the most complex and important problems is the cooperation with local authorities. From 5462 issued special permits for subsoil use at about 1,500 sites have not started work, 8 regions have not agreed any application as filed, the total number of applications filed about 72% have not been agreed by regional councils. In 40% of projects are frozen due to land issues. According to the Association "Ukrainian Subsoil Users" to resolve the situation could be using the tools of financial motivation of areas: part of rent payments deducted by mining companies to the state budget, could enter the regional or local budgets, and then distributed to social needs. In this case, the local community would be interested in the first to the process of harmonizing the allocation of land for geological prospecting works or industrial exploitation is not delayed. And it would be better to get approval Gosgeonedrami before, as a special resolution will be put up for auction for the sale to the investor. This is the principle of systemic changes in the regulation of relations in the subsoil and the reform of the State Service of Geology and subsoil of Ukraine for service when an investor acquires at auction package of documents to the field and then can begin to work smoothly. But changes are needed not only on the regulatory level, but are also important legal, technological and economic activities. Subsoil users state that along with political and economic instability, they are not satisfied, above all, the lack of mechanisms to protect their interests, first and foremost - in geological prospecting, and limited access to the registers. The absence of a global industry subsoil strategy, primarily in exploration, leading to significant economic and reputational losses in Ukraine, impedes the development of the industry. More than once both at the governmental level as well as by the mining companies raised the issue of improvement of the legislative framework in line with international best practices. Along with the adoption of a new Code on subsoil must also maximum simplification of licensing procedures and the abolition of the practice of duplicate approvals, preventing attempts of fiscal pressure on the subsoil users, to ensure transparent procedures for conducting auctions, for example through the improvement of the practice of electronic auctions.
At the level of technological measures Gosgeonedr plans to analyze the effectiveness of subordinate geological enterprises in terms of the use of innovative technologies, taking into account market conditions. Also, according to the agency experts need to organize information about available fields, taking into account the needs of the economy and investment attractiveness, to conduct regular audits of existing licenses (special permits) in order to identify non-performing businesses, the reasons and methods of resuscitation projects.
As part of the economic measures to increase the production of hydrocarbons is necessary to analyze the needs of the national economy and trends in world commodity markets, which will provide an opportunity to improve communication with potential investors and offer exactly those projects that will be of interest at this stage mining companies. To attract investors, you need to have at exploration stage, resulting in reduced use of budgetary funds, which stands out for a long time, and so is not enough. thus presented to public discussion Strategy hydrocarbon production sector reform provides for the phasing out of state regulation of subsoil use in favor of the market; ensuring effective management and control of subsoil operations; attracting international expertise and strengthen communication with the investment community; creating conditions for intensive involvement of investors in the subsoil use sector, primarily exploration; simplification of procedures for users of mineral resources and the opening of information; maximum preservation of the main asset of the region - the intellectual talent pool. As a result of the functioning of the model presented Gosgeonedr Ukraine will be able to integrate into the European geological community to become an attractive investment destination for investors to increase hydrocarbon production and thus ensure energy security.
April 25, 2016