Ukrnafta expects to sign first agreements on deposits' joint development by March 2024

MOSCOW. Nov 23 (Interfax) - PJSC Ukrnafta expects to sign the first agreement on the joint development of 21 deposits before March 2024, the company's director Sergei Koretsky said.

"The first results of the competition will become available in January. The agreements will be signed by around March 2024," Ukrainian media quoted Koretsky as saying in an interview with Forbes Ukraine.

The competition drew interest both from Ukrainian and foreign companies, he said.

"There are foreign companies that are ready to go east under production sharing agreements. These are both large and small Western companies. Forty-five companies are already on the list of interested parties. Twenty-seven have signed a non-disclosure agreement and are actively studying the documents. These are the companies that have experience, technologies and money," Koretsky said.

Ukrnafta's potential counterparties stand ready to take on the risk of working with higher return rates than in countries where there is no crisis, he said.

The company's 2023 investment, mainly in production and services, will amount to 4 billion-4.5 billion, he said.

"We have an ambitious plan for the following year as well. But this investment plan is yet to be endorsed. We need to wait for approval at all levels, and we will present it then. The entire amount of investment will be go into production, upgrades and the acquisition of equipment. We can't drill at the pace of Ukrgazvydobuvannia with three Soviet-era rigs," Koretsky said.

As reported, Ukrnafta has invited potential partners to submit applications for the joint development of 21 fields (10 in the west and 11 in the east of Ukraine) by January 10, 2024. In 2P category reserves, that is, proven and probable reserves, this is more than 12 million tonnes of oil and more than 31 billion cubic meters of gas.

The company's contribution will be the deposit and the right to use the existing production infrastructure, and the partner's contribution will be a plan for the development of the deposit to enhance production and finance the relevant work.

The rules for submitting applications and selecting potential investors are as follows: candidates express interest, go through compliance procedures, gain access to the Virtual Data Room with detailed information about the fields, and submit proposals on development plans and terms for cooperation.

Ukrnafta then evaluates proposals, holds negotiations and selects winners separately for each field. The parties agree on the final text of the production sharing agreement, then the government, after which the development plan starts to be carried out.