Annually Ukraine spends billions of dollars on gas imports. Approximately 60% of the total consumption of natural gas – domestic production, with another 40% have to buy abroad. Of the cost of imported fuel depends on the gas prices for ordinary Ukrainians. And that rise in price of blue fuel set in motion a chain of gradual growth in the prices of all utilities. So, from the price of gas also depends on the cost of heating and hot water. Already in 2020, according to the plans of the Cabinet of Ministers, Ukraine will be able to completely abandon the import of blue fuel. The website “Today” found that the need for the development of its own gas production.
Can Ukraine become energy independent
In the Soviet Union, Ukraine was the largest gas producing country. The peak of production fell on 1973, when the Ukrainian companies managed to raise 68 billion cubic meters of blue fuel. During this time, the situation has changed dramatically – at the end of last year, Ukraine produced a total of 20 billion cubic meters. As noted in the “Ukrgasdobycha” (UGD), most of the already opened fields have been exhausted by 70-80%. “To sustain production, we need somehow this amount would be offset by new drilling, intensification, workover rigs. Or minimize natural decline, or to find and start to produce gas in a new field”, – says the head of the UGD Oleg Prokhorenko.
“To sustain production, we need somehow this amount would be offset by new drilling, intensification, workover rigs. Or minimize natural decline, or to find and start to produce gas in a new field”, – says the head of the UGD Oleg Prokhorenko.
Exploration, workover, new drilling – all this is possible only if constant investment. Instead of developing our own extraction Ukraine all this time was buying cheap gas in Russia. According to the Deputy head of the parliamentary Committee on fuel and energy complex Oleksandr Dombrovskyi, since independence, Ukraine imported from the Russian Federation of the blue fuel in the amount of more than $ 100 billion. “This is another of the country’s GDP,” – said the MP.
In November 2015, the Cabinet has refused to supply gas from Russia. Now the blue fuel is imported from countries of the European Union, who in turn buy it in Russia. The consumption over the last ten years has decreased several times: from 73.9 billion in 2006 to 32.3 billion cubic meters of gas in 2016. But now on the import of blue fuel it is necessary to spend billions of dollars annually.
By 2020, the government plans to reduce consumption to 27 billion cubic meters of gas and to fully compensate him for the expense of its own production, said Vice-Premier Vladimir Kostin the second Gas investment forum.
“For the first time the industry came up with the idea to 2020 to make the industry independent of imports. It’s a choice that made the largest gas company, progressive representatives of the Parliament, government,” – says CEO of “DTEK oil & gas” Igor schurov.
“For the first time the industry came up with the idea to 2020 to make the industry independent of imports. It’s a choice that made the largest gas company, progressive representatives of the Parliament, government,” – says CEO of “DTEK oil & gas” Igor schurov.
State enterprise “Ukrgazdobycha” produces 70% of all Ukrainian gas, which is about 14.5 billion cubic meters, and another 30% are private companies. The challenge for the EHD to raise production to 20 billion cubic meters, while private companies – to increase production to seven billion cubic meters.
How to increase production: fiscal pressure and investment
The tax burden on gas production in the EU countries – on average 12% and in Ukraine – 30%, says the Director of the Association of gas companies novel opimah. In 2015 companies were paying record-high rents – 70%. As a result, as noted by Oleg Prokhorenko, extraction of blue fuel at the enterprises of joint ventures (JV) decreased significantly, funds for investment and the purchase of new equipment left.
“We do not see a significant increase in production. We need to change the fiscal regime. I talked to all market participants, with all the experts to whom I had access, and to which I have had access to it, until we change the fiscal regime, nothing will change…Taxes need to be revised, and that is why we proposed new wells rental rate of 12%, but we still could not find support of this decision in Parliament,” says a member of the parliamentary Committee on fuel and energy complex, Olga Belkova.
Photo: newfolk.com.ua
In addition, to increase its gas production to 27 billion cubic meters, it is necessary to attract billions of dollars of foreign investment.
However, in unstable economic and political situation and high rental rates, foreigners do not rush to invest their capital in Ukraine, says ex-Deputy Minister of economy, Chairman of the Supervisory Board of “Naftogaz” Yulia Kovaliv.
“Until 2020 we need to increase production by 35%. Without investment, without technology to achieve it would be impossible. We have political and macroeconomic risks more than our neighbors. Therefore, we must offer investors competitive conditions”, – says the head of the Supervisory Board of “Naftogaz”.
“Until 2020 we need to increase production by 35%. Without investment, without technology to achieve it would be impossible. We have political and macroeconomic risks more than our neighbors. Therefore, we must offer investors competitive conditions”, – says the head of the Supervisory Board of “Naftogaz”.
To UGD to increase gas production to 20 billion cubic meters, said the press Secretary of the enterprise Vladimir Gaydash, in a few years you need to invest four billion dollars. “We are working to achieve production volume of 20 billion cubic meters in 2020. In parallel, Ukraine will reduce consumption, we will become volatile. To do this, four billion dollar investment,” – said Vladimir Gaydash.
In addition, the gas sector in Ukraine is over-regulated, experts believe. According to Roman Opimakh to start mining, you will have to obtain permission 44 at 16 institutions. On the “paperwork” takes two years, in the EU – an average of six months.
Ukraine spends billions of dollars on Parking streets
The main consumer of gas in Ukraine – the population. The vast majority of apartment buildings require heat modernization. In fact, the Ukrainians not only heat their homes and apartments, and streets. Due to the non-insulated walls, leaky Windows, basements, roofs annually “lost” nine billion cubic meters of gas. This is more than a year, mined all Ukrainian private companies. This amount of gas costs Ukraine $ 2.2 billion (a thousand cubic meters of imported gas this year is $ 245, said the country’s budget).
Another 2.4 billion cubic meters of gas, according to estimates of the Ministry of regional development and housing, is lost in the heating system. Only because of the efficiency in consumption of natural gas could be reduced by 11 billion cubic meters. “Ukraine is the most energy intensive part of Europe. Here wasting the most resources, the loss is much greater than in countries with a similar climate,” says the Deputy Director General of the European Commission for neighbourhood policy and enlargement Katerina Mathernova.
Photo: gazprom.ru
If Ukraine reached the level of efficiency of Poland, said Alexander Dombrowski, and refused to import gas, the welfare of Ukrainians could be increased 3.5 times. And according to Prime Minister Vladimir Groisman, the rejection of import of natural gas will significantly strengthen the national currency.
“We are really tasks that give the opportunity today to say that three or four or five years Ukraine will become energy independent. This is a huge contribution to our economy and stability. Colossal. I recently saw a dimension that shows, if we had extracted gas to Ukraine, but didn’t buy it for hard currency, the dollar would be today, with all the problems that we have would not be worth more than 18.5 hryvnia,” — said Groisman in an interview with “UKRINFORM”.
We would remind that several days ago Ukraine adopted the law on “energy efficiency Fund”. In addition, the consideration of the Parliament are three important draft laws: “on energy efficiency of buildings”, “commercial costs” and “on housing and communal services”. The adoption of these instruments, according to the authors, will allow to significantly reduce energy consumption: all non-residential buildings will have to conduct energy audit. More information about the laws can be read here.
