Ukraine approves procedure for selling state share of gas in PSAs

MOSCOW. Feb 12 (Interfax) - Ukraine's Cabinet has approved the procedure for using (selling) the state's share of natural gas produced under production sharing agreements (PSA), Ukrainian media reported, citing the government's representative in parliament, Taras Melnichuk.

Gas of Ukraine, a subsidiary of state oil and gas company Naftogaz Ukraine, has been designated as the authorized party to carry out all actions with state-owned hydrocarbons under PSAs.

Investors will transfer the state's share of production under PSAs to Gas of Ukraine, which will sell the gas publicly on a licensed commodities exchange. All proceeds from such sales will be transferred to the state budget and the budget of the region where the corresponding field is located, according to Ukraine's Association of Gas Producers.

"Thus, not only Ukraine, but also regional communities will receive funds from operating PSAs to implement social initiatives," the association said in a statement on its website.

Ukraine signed PSAs for seven hydrocarbon blocks at the end of 2020, including with Ukrgasvydobuvannya on the Berestyansky, Buzivsky, Balakleisky and Ivanivsky blocks; with Rinat Akhmetov's DTEK on the Zinkovsky block; with Viktor Pinchuk's Geo Alliance on the Sofiyevsky block; and with Zinovy Kozitsky's Well Co on the Ugnivsky block.

Ukraine signed another PSA in November 2021, with EP Ukraine B.V. on the Grunivsky and Akhtyrsky hydrocarbon blocks. EP Ukraine was founded by Czech company EP Power Europe and Slovakia's Nafta.