Ukraine, energy co agree to sign PSA on Skifske hydrocarbon deposit within a month
NEW YORK. Sept 26 (Interfax) - Ukraine and leading international energy companies have signed an agreement to conclude a production sharing agreement (PSA) on the Skifske hydrocarbon deposit on the Black Sea shelf.
The official signing ceremony took place in New York on Wednesday, an Interfax-Ukraine correspondent reported.
Ukrainian Energy and Coal Industry Minister Eduard Stavytsky signed the agreement on behalf of Ukraine's Cabinet of Ministers. The agreement was also signed by representatives of ExxonMobil, Royal Dutch Shell and OMV Petrom S.A.
"We've taken the first step under laws in effect, which should be realized when a production sharing agreement is signed. We have identified the areas that will allow us to complete the [PSA] signing, which, as our colleagues and I believe, will take place within a month's time in Kyiv," Stavytsky said after the signing of the agreement.
The minister said they are currently going through the necessary procedural matters, whereas the actual work at the Skifske deposit in the Black Sea is expected to start later this year.
Stavytsky noted that first of all they would carry out the necessary geological prospecting procedures to locate the area for future drilling. According to the minister, two wells are to be drilled in 2014.
"According to the estimates of our counterparts, ExxonMobil and the entire consortium [of the energy companies], we are talking about 8-10 billion cubic meters [of hydrocarbons] a year in case of commercial production," Stavytsky said when asked about prospects of gas production in the Black Sea.
He said that production at such facilities usually begins three years after the launch of geotechnical work, and the production volume is expected to reach its best within five to seven years.
Ukraine in 2012 held three tenders to sign PSAs: on the Yuzivske deposit (Kharkiv and Donetsk regions), Oleske deposit (Lviv and Ivano-Frankivsk regions) and Skifske deposit (the deep-water shelf of the Black Sea).
The winners in the tender to develop the Skifske deposit was a consortium led by U.S. ExxonMobil (40%, the operator), Shell (35%), Austria's OMV represented by Romanian subsidiary Petrom (15%), and Nadra Ukrainy (10%).
The Skifske field covers 16,698 square kilometers and borders on Zmiyiny (Serpent) Island. The total investments in this field were previously estimated at $10-12 billion. The projected annual natural gas production could total 3-4 billion cubic meters (bcm), which will bring UAH 80-90 billion to the budget.
The Skifske deposit winner offered a special payment of about $325 million, and the Yuzivske deposit winner about $400 million.
Ukraine on January 24, 2013, signed the first PSA for 50 years with Shell, which will invest funds and produce shale gas in the Yuzivske block.
Until recently, the signing of a PSA on the Oleske block with Chevron had been postponed due to disagreements with Ivano-Frankivsk Regional Council and Lviv Regional Council. However, on September 20, 2013, Ivano-Frankivsk Regional Council approved the amended production sharing agreement. However, it will become effective after a number of obligatory conditions have been met.
The Cabinet of Ministers late in August 2013 prolonged the deadline until November 24, 2013, for signing the PSA on the Oleske deposit with Chevron and on the Skifske deposit with a consortium led by ExxonMobil.
