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Naftogaz attracts international investor to increase gas production in depleted fields

BLACK SEA
OIL & GAS

Naftogaz attracts international investor to increase gas production in depleted fields

According to the results of an open tender, Naftogaz group has attracted international company Expert Petroleum to increase hydrocarbon production in the Ukrgasvydobuvannya JSC fields in Western Ukraine - the company announced on its website.

Within the framework of the first full-scale Production Enhancement Contract (PEC) in the history of Ukraine's oil and gas industry, this new Western partner has committed to invest about UAH 1 billion (around USD 30 million based on exchange rate forecasts) into intensification, drilling and development of infrastructure over the first five years of cooperation and, potentially, make additional further investments.

The partnership between Naftogaz and Expert Petroleum will generate at least an additional 300 mcm of gas within five years from 13 small fields in Western Ukraine, reports Naftogaz

We will bring new technologies to Ukraine and introduce European standards for management of "old" and "small" deposits, which can be extrapolated to other fields, as most of Ukraine's oil and gas assets are depleted and small in size. This is an important step towards stabilizing the situation not only in the industry but also in the Ukrainian economy. And this is an example of innovative anti-crisis solutions that the country needs today.

Otto Waterlander, Chief Transformation Officer, Naftogaz group

According to in-house calculations, intensification of works, increase of tax and other budgetary contributions of the partnership will allow for the accumulation of more than UAH 4 billion in the GDP of Ukraine and Lviv region in particular.

We plan after completing new reservoir models to drill new wells, carry out operations on intensification of existing wells using the latest technologies in directional drilling, logging, water shut off management and perforations, and modernize surface facilities to increase operational efficiencies, reduce energy intensity, and environmental footprint.

Michel Louboutin, co-founder and COO, Expert Petroleum

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 baseline production (at the level of current operating costs of Ukrgasvydobuvannya, taking into account inflation) and for achieving incremental production. Full ownership of the extracted production, geological licenses and existing assets will remain with Ukrgasvydobuvannya.

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