Ukraine announces massive licensing rounds in 2019

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KYIV, Ukraine — Ukraine has outlined terms for a series of oil and gas licensing rounds with acreage of nearly 25,000 km2. At this moment, 35 onshore and 1 offshore blocks have been officially opened for transparent competitive bidding.

Concession areas to be sold through online auctions cover more than 4,000 km2, and production sharing agreement (PSA) blocks up for tenders cover 11,600 km2 onshore and 9,500 km2 offshore.

All onshore blocks are located in proven petroleum provinces with well-developed midstream infrastructure and widely covered by geophysical surveys. Predominantly, all blocks have undiscovered hydrocarbons resources estimated as inferred (yet-to-find).

First and second licensing rounds, taken place on March and May, have resulted in the awarding of concession licenses for nine blocks from seventeen proposed. The total paid amount was more than $8.5 million. Four Ukraine’s gas producers received new acreages: Burisma Group, DTEK Oil & Gas, state-owned UGV and  Yedyna Oil & Gas Company.

Third round is scheduled for June 18, 2019, offering nine blocks in three regions. All licenses are for E&P during 20-year period. In addition, the Ukrainian government has opened a public tender for nine onshore and one offshore PSA blocks with duration of 50 years. Interested parties have to submit applications by May 28 and June 12, respectively. The highest bids will be selected in one month later. The final PSAs deals will have to be concluded during one year with the option to extend the negotiation by six months more.

Terms of the concession auctions

Auctions call for participants to be Ukrainian legal entities although they can be controlled by a nonresident company. The bidder is mandated to pay the refundable guarantee fee at 20% of the initial price of the bid. During the four-year exploration period, a minimum work program must be completed which is to include seismic acquisition on 1/4 of the acreage and no less than one commercial well drilling. The participant with the highest cash bid wins the auction.

Terms of the PSA tenders

Ukrainian and nonresident legal entities are allowed to participate in the tenders. A non-refundable bid submission fee accounts for $10,830.

A minimum financial commitment in the five-year exploration period have been stipulated dependent on each block in the range $16 million to $56 million. During the exploration period, a minimum work program must be completed which is to include seismic acquisition and no less than two exploration wells. Offshore block Dolphin minimum work program requirements include five exploration wells drilling, but do not stipulate seismic acquisition.

The submitted bids will be assessed according to the following criteria: the best work program – 80 points; efficient use of natural resources – 15 points; attractiveness of bids as regards production sharing in favor of the state – 30 points; the largest volume of investments – 35 points; efficient environmental protection measures – 15 points; level of financial security of the proposed work program – 30 points; previous experience in E&P, in particular from unconventional formations – 45 points; and utilization of goods, works, and services of Ukrainian origin – 20 points.


Kabir Ismail is a blogger, website developer/administrator and a comrade.

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