Industry Trend Analysis - Non-State Players Key To Gas Recovery - OCT 2017

BMI View: Gradual progress in the country ' s gas sector continues, with production crawling upwards and private investment flows beginning to pick up. Whilst a modest recovery is expected, Ukraine ' s overall gas production outlook remains clouded by weaknesses in the fi scal and regulatory environment, which continues to limit investment.

The largest independent producer in terms of production volumes, Burisma Group, has recently brought online a number of new wells as part of its longer term drilling programme. The company is targeting the completion of 20 wells over 2017. Importantly, the company has completed an expansion of its gas processing facility at its Karaykozivske field, boosting gas production potential. Similarly, JKX Oil & Gas, one of the largest non-state producers in the country, which was previously was forced to cancel its 2015 capex guidance and suffered significant losses following fluctuations in tax rates and domestic supply obligations by the Ukrainian government, has shown signs of recovery over the first half of the year, with the successful completion of phase one of the appraisal programme at the Rudenkivske field.

Whilst private-owners make up only a relatively small proportion of Ukraine's total gas production (4.2bcm out of total domestic production of 20.1bcm), the flow of private capital and importantly the influx of technology from private players will be crucial in boosting the country's gas output. Private producers have provided some of the most notable growth to output in recent years, growing from 2.1bcm in 2010 to 4.2bcm last year as overall production fell.

Gas Output Strengthening In 2017
Natural Gas production, mcm
Source: JODI

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