Naftogaz Set for Offshore Exploration Rights
Ukraine's Naftogaz has been given initial permission from the government to explore and develop an area of the Black Sea, without having to go through a tender.
The decision was taken at a government meeting on November 25, Ukrainian media reported, with natural resources minister Roman Abramovsky suggesting that Naftogaz could partner with other investors at the project.
Naftogaz has been calling on the government to grant it access to the country's Black Sea shelf to help it expand gas production and reduce Ukraine's need for imported supplies. Authorities auctioned off rights to a 9,500-km2 area of the Black Sea, resulting in several bids and an award to London-based Trident Resources.
The award was cancelled, however, after the government said bidders had not been given enough time to size up the asset. The government had wanted to restage the contest, but that plan was put on hold as a result of the coronavirus crisis.
Confirming the government's decision, Naftogaz said on social media on November 25 that investments in the first year of its work on the shelf could reach $40mn. "We are determined and ready to begin seismic research at sea as soon as possible, after formal procedures are resolved," it said.
Ukraine's Black Sea zone holds 1-2 trillion m3 of gas, Naftogaz said, adding this was enough to support 10bn m3/year of annual production. But drilling is needed to prove reserves and assess how much gas is commercially recoverable.