Ukrainian gas companies pay about 40-bln-hryvni rent in 2023

MOSCOW. Nov 2 (Interfax) - The overall rent paid by Ukrainian gas companies in January-August 2023 nears 40 billion hryvni, head of the Association of Gas Producers of Ukraine Artem Petrenko said.

"Over 70 billion hryvni were paid as rent last year, as gas prices were quite high. Almost 40-billion-hryni rent was paid in last eight months. This means the companies keep working," Ukrainian media quoted Petrenko as saying at the conference with the theme, "Ten Years of the EITE [Extractive Industries Transparency Initiative] in Ukraine: Achievements and Prospects."

Over 2 billion hryvni were directed to local budgets, which is crucial "for people on the ground to see the effect from production," Petrenko said.

The association head predicted an increase in production in the near future. "Last year, we saw a decline in production by public and private companies, still Ukraine managed to preserve its gas industry and now we see a trend towards stopping the fall," Petrenko said.

Public companies, above all, UkrGasVydobuvannya, are ramping up production, and "we see a prospect of larger production by private companies" starting next year, Petrenko said. Private gas companies set an all-time production record of over 5 billion cubic meters of gas in 2021, he said.

Every existent gas production project is a unique chance of Ukraine to ensure its full energy independence and energy security, Petrenko said. "This is a prospect of selling gas both in Ukraine and abroad, including the European Union, which seeks full diversification of gas supplies and refusal from Russian gas," he said.

As reported, UkrGasVydobuvannya paid 13.88 billion hryvni to the consolidated budget in January-August 2023.

In turn, NaftoGasVydobuvannya, the main production asset of DTEK Naftogaz, paid over 2.2 billion hryvni as mineral resource rent to the state budget in the first half of the year, and some of the payments (5%) went to local budgets.

The rent is based on the highest of three domestic gas prices recorded between August 1, 2022, and cancellation of the ban on Ukrainian gas exports, consistent with the amendments to the procedure for calculating the mineral resource rent in gas production.

Before the amendments took effect, the actual cost of gas was calculated as the arithmetic average of the customs value of imports and quotations at the Dutch TTF gas hub.

A revision of tax legislation stems from a significant increase in spot prices in Europe, a ban on the export of Ukrainian gas and a decrease in domestic consumption, which makes production unprofitable for many companies: gas prices in Ukraine are much lower compared to European prices.

The gas rent was calculated solely on the basis of the customs value of imports until March 2022.