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Naftogaz is grateful to Government for attention to gas production issues and calls for joining efforts to increase gas production

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OIL & GAS

Naftogaz is grateful to Government for attention to gas production issues and calls for joining efforts to increase gas production

Naftogaz Group shares the concern of Prime Minister Volodymyr Groysman regarding the progress in the implementation of the Concept of Oil and Gas Industry Development approved by the Cabinet of Ministers of Ukraine in 2016.

According to this program, gas production in Ukraine would be increased up to 27.6 billion cubic meters in 2020. At the same time it was planned to reduce the demand of Ukrainian consumers for this type of fuel to the same level due to the introduction of the energy efficiency programs. As of year-end 2018, gas production in Ukraine reached 21 billion cubic meters, and demand for gas amounted to 32 billion cubic meters.

The pace of the implementation of the Concept approved by the Government, both in terms of increased gas production and its more efficient use, does not correspond to the approved schedule.

Large-scale geological exploration to discover new deposits was the first area in implementing this Concept. However, the Government’s plans to increase domestic gas production were disrupted due to the systematic obstruction to obtaining permits for subsoil exploration and development. Both JSC Ukrgasvydobuvannya and private companies actively engaged in production activities have been deprived of the possibility to obtain licenses for new areas for several years.

Program 20/20: plan and current situation

In 2018, Ukrgasvydobuvannya as a company of Naftogaz Group produced 15.5 billion cubic meters of gas, including 14.1 billion cubic meters of commercial gas. Ukrgasvydobuvannya is the largest gas producer in Ukraine and ensures 73 % of Ukrainian gas production.

In 2016, Ukrgasvydobuvannya adopted a plan to increase its own production to 20 billion cubic meters by the end of 2020 within the Government Concept. When approving the program the Government expressed its readiness to support the Company in its implementation, because this required coordinated cooperation of Ukrgasvydobuvannya, Naftogaz, central and local authorities.

The Company had to achieve its ambitious goal of increasing production through two main areas: production stimulation on existing deposits and production on new deposits.

Ukrgasvydobuvannya successfully implemented the first component of Program 20/20. In particular, during the last four years, the drilling meterage has almost doubled, the hydraulic fracturing program (from 0 to 300+) has been introduced and intensively develops, the number of coil-tubing operations has unpredictably increased (from 4 to 1400+), more than 500 operations in wells have been performed.

As for the geological exploration, eight new deposits have been discovered, 3D seismic survey volume has tripled, and the resource profile for existing deposits has been increased by 38.6 billion cubic meters for the first time since 2015.

1,000 units of equipment have been modernised, accounting for 30% of the total Ukrgasvydobuvannya’s fleet, 20 new modern drilling rigs for own fleet and 15 drilling rigs of international contractors for drilling outsourcing have been contracted over these four years.

Due to these activities, Ukrgasvydobuvannya succeeded in compensating the natural decline in production and reached a total increase in production (including compensation for natural decline) for 2015-2018 by 5.35 billion cubic meters. Natural decline of 1.2 billion cubic meters of gas per year has been compensated for previous year. The Company has also reached increase in production from 14.5 billion cubic meters in 2015 to 15.5 billion cubic meters in 2018.

Read full article to Naftogaz Group

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