Ukraine signs PSA with Eni, EDF for Black Sea blocks
KYIV. Nov 27 (Interfax) - Ukraine has signed a production sharing agreement (PSA) with Eni, Electricite de France, Chernomornaftogaz and Water of Ukraine LLC for the development of the Subbotina, Abikha, Mayachna and Kavkazka blocks in the Black Sea.
The Ukrainian president's press office said the PSA was signed in then presence of Viktor Yanukovych, the president himself. Ukrainian Energy and Coal Industry Minister Eduard Stavytsky signed the agreement on Ukraine's behalf. Guiseppe Tannoia, Eni Executive Vice President South and East Europe, and Pierre de Firmas, EDF, Director, Russia-CIS Nordic, Europe & Global, also signed it.
The cabinet endorsed the draft PSA on November 25.
This is a 50-year PSA which can be extended by decision of the parties involved. Eni, the project operator, will have 50%, EDF - 5%, LLC Waters of Ukraine - 35% and Chernomornaftogaz - 10%.
The sections are in shallow waters at 76 meters for Subbotino, 50 meters for Abikha, 30 meters for Mayachnaya and 60-70 meters for Kavkazskaya.
Ukrainian Energy and Coal Industry Minister Eduard Stavitsky has said the overall license area is around 2,000 square km and sea depth around 100 meters. Project investment of around $4 billion is expected, and oil production could be at least 2 million tonnes a year and at most 3 million tonnes.
Eni and EDF will invest at least $350 million in initial prospecting, involving 3D seismic and drilling four wells.
The foreign investors will have a 75% share in the production. The PSA calls for an additional charge of $2.2 per barrel of oil or gas condensate produced.