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Overview of the Ukrainian Oil & Gas and Shale Gas Market Opportunities by Lyubomyr Goncharuk Adviser to the Minister of Ecology and Natural Resources of Ukraine
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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CONTENTS 1. Reserves & Resources 2. Production & Consumption 3. Opportunities Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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1. Reserves & Resources
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Four oil and gas provinces are recognized in the country, including 11 oil-gas basins and 35 prospective areas. Hydrocarbon deposits are being exploited for oil, gas, and condensate in the following regions:
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
Oil & Gas 1/2
• A – the Eastern Region (DniprovskoDonetska Depression and northwestern portion of Donbas);
Crystalline basement slopes
Vo r
VolynoPodilska Plate
B
Dn ip
ro
vs
ko
on
-D on
Kyiv
Lvivskiy Trough
ez hs
et s k
A
ka
aD
ep r
An tic lin e
es
si o
n
r Fo ou Tr an hi at rp Ca s ean ed h i l d at Fo ar p C
Tr an s
at h
UKRAINIAN SHIELD
gh
ca rp
Donbas
• B – the Western Region (VolynoPodilska Plate, Fore-Carpathians, Folded Carpathians, and TransCarpathians);
i an
s
200 km
Fore-Crimean Depression
ForeDobrugean Trough
C Black Sea
Azov Sea Scythian Plate
t ai n un Mo r i m ea C
• C – the Southern Region (Prychornomorya, Crimea, and the exclusive marine economic zone of the Black Sea and Azov Sea offshore).
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In 2011, production amounted to 2.4 million tons of oil, 0.9 million tons of condensate, and 20.6 billion cubic meters of natural gas.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
The State Inventory includes 187 oil deposits (121 in production), 202 condensate deposits (142 in production), and 380 natural gas deposits (224 in production).
Oil & Gas 2/2 Crystalline basement slopes
Vo r
VolynoPodilska Plate
Dn ip
ro
vs
ko
on
-D on
Kyiv
Lvivskiy Trough
ez hs
et s k
ka
aD
ep r
An tic lin e
es
si o
n
r Fo ou Tr an hi at rp Ca s ean ed h i l d at Fo ar p C
High
Medium
Tr an s
at h
UKRAINIAN SHIELD
gh
ca rp
Donbas
i an
Proven and probable reserves are estimated to:
s
200 km
Fore-Crimean Depression
Azov Sea ForeDobrugean Trough
Low Black Sea
Scythian Plate
t ai n un Mo r i m ea C
• 133 million tons of oil • 66 million tons of condensate • 1 trillion cubic meters of natural gas
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This is potentially an important nonconventional additional hydrocarbon resource confined to coal deposits in the Donetskiy (A) and Lvivsko-Volynskiy (B) coal basins.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
The State Inventory comprises 200 deposits, of which 99 are in production. Proven and probable reserves of methane are estimated at 343 billion cubic meters.
Coalbed Methane Crystalline basement slopes
VolynoPodilska Plate
Vo r
B
Lvivskiy Trough
Dn ip
ro
vs
ko
on
-D on
Kyiv
ez hs
et s k
aD
ep r
An tic lin e
es
si o
n
r Fo
A
ou Tr an hi at rp Ca s ean ed h i l d at Fo ar p C
Tr an s
at h
Donbas
UKRAINIAN SHIELD
gh
ca rp
In 2011, production totaled to 760 million cubic meters of methane.
ka
i an
s
200 km
Fore-Crimean Depression
Azov Sea ForeDobrugean Trough
Scythian Plate
Black Sea
t ai n un Mo r i m ea C
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Non-conventional shale gas resources are not recorded yet in the State Inventory being preliminary estimated to some trillions of cubic meters.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
Up to recent no research and practical exploration were conducted in Ukraine. Nevertheless, reconnaissance studies commenced last years in Donetskiy (A) and Lvivsko-Volynskiy (B) coal basins as well as Dniprovsko-Donetska (C) and Prychornomorska (D) depressions and Fore-Carpathian (E) and Fore-Dobruja (F) troughs (fold belts).
Shale Gas Crystalline basement slopes
VolynoPodilska Plate
Vo r
Dn ip
B
ro
vs
ko
on
-D on
Kyiv
Lvivskiy Trough
ez hs
et s k
ka
aD
C
ep r
es
si o
An tic lin e
n
r Fo ou Tr an hi at rp Ca s ean ed h i l d at Fo ar p C
Tr an s
at h
i an
s
E
A
UKRAINIAN SHIELD
gh
ca rp
Donbas
200 km
Fore-Crimean Depression
D Azov Sea
F
ForeDobrugean Trough
Scythian Plate
Black Sea
t ai n un Mo r i m ea C
In 2012, the shale gas field tender has been organized for two sites located in the areas A and B. The permits for 50 years of exploration and production granted to Shell (A, Yuzivska field, 7886 km2) and Chevron (B, Oleska field, 6324 km2), depth 10 km each. The total investments required under PSA conditions are estimated to $3.7 bln. in Yuzivska field and $3.1 bln. in Oleska field.
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The State Inventory contains more than 900 deposits with proven and probable reserves, located in Donetskiy (A) and Lvivsko-Volynskiy (B) coal basins, of which 400 are being exploited underground.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
Coal
Ukraine’s proven and probable coal reserves are estimated at 53 billion tons.
Crystalline basement slopes
VolynoPodilska Plate
In 2011, production totaled to 69 Mt. Vo r
B
Lvivskiy Trough
Dn ip
ro
vs
ko
on
-D on
Kyiv
ez hs
et s k
ka
aD
ep r
An tic lin e
es
si o
n
r Fo ou Tr an hi at rp Ca s ean ed h i l d at Fo ar p C
Tr an s
at h
A
UKRAINIAN SHIELD
gh
ca rp
Donbas
i an
s
200 km
Fore-Crimean Depression
Azov Sea ForeDobrugean Trough
Scythian Plate
Black Sea
t ai n un Mo r i m ea C
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2. Production & Consumption
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
10/25 Hard Fuels (source: www.ukrstat.gov.ua) 64
700 559
639
544
61,7
60
58,9
60,4 59,8
59,4
59,5
500 430
462 395
56
400
358
300 55,0
54
2003-2011
600
449
55,0
200
52
100
50
0 2003
2004
2005
2006
2007
2008
2009
2010
2011
Years Coal, mln. t
Liquid Fuels (source: www.ukrstat.gov.ua)
Peat, th.t
3,5
Ukraine mineral figures. Fuels
1,3 3,1
Crude Oill, mln. t
3,3
2,8
3
3,0
2,5
1,1
1,2
3,2 3,3
1,4 2,9 2,6
1,2 1,1
1,1
1,1
1,2 2,4
1
1,0 0,9
2
0,8
1,5
0,6
1
0,4
0,5
0,2
0
Gas Condensate, mln.t
58
61,8
Peat, th.t
Coal, mln. t
62
0 2003
2004
2005
2006
2007
2008
2009
2010
2011
Years
Gaseous Fuels (source: www.ukrstat.gov.ua)
Natural Gas, bln.m3
20
880
832
745
19,6
20,7
950
1000
867 744
20,2
20,1
19,5
19,8
19,9
800 721 600
658
19 18,5
19,2 18,6
400 200
18 17,5
0 2003
2004
2005
2006
2007
2008
2009
Years Natural Gas, bln. m3
Gas Condensate, mln.t
1200
20,6 962
Oil-Related Gas, mln.m3
2010
2011
Oil-Related Gas, mln.m3
21 20,5
Crude Oil, mln. t
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
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200 180
140 120
500
Ukraine GDP and Government Revenue (source: www.economywatch.com)
400 300
100 80
200
60 40
GDP
20
Government Revenue
0
Government Revenue, UAH billion
GDP, USD billion
160
100 0
2003
2004
2005
2006
2007
2008
2009
2010
2011
Years
GDP, Revenue
Ukraine mineral trends. Growth & Breaks
growing Coal Peat flat-varying Oil-related Gas descending
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
Crude Oil Natural Gas Gas Condensate
World Crisis 2004
2006
2008
2010
2012
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2010
28% iron ores iron ore concentrates iron casts oil & products 52%
fertilizers 5%
non-organic chemicals non-minerals
4% 7%
Ukraine mineral sector export
2%
2%
2011
Total - $68.4 bln 27% iron ores iron ore concentrates iron casts oil & products
49%
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv February 25-26, 2013
fertilizers 6% 4%
non-organic chemicals non-minerals
8% 3%
3%
Source: www.ukrstat.gov.ua
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Ukraine: some country figures
Country territory: Population:
•
Annual gas statistics (2011):
232 000 sq miles 45 million
Gas consumption: 2.08 Tcf, including: Industry — 1.12 Tcf Public utilities — 0.96 Tcf
Import from Russia — Production in Ukraine —
Gas transit from Russia to Europe via Ukraine territory — 3.65 Tcf
1.35 Tcf 0.73 Tcf
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Ukraine: gas production •
•
Domestic natural gas production — 721 Bcf /year • 676 Bcf — on-land production (in Ukraine) • 43 Bcf — offshore gas production in Black Sea (6%) Offshore gas extraction facilities (Black Sea): • Two old offshore jackup rigs work in Black Sea operate for over 15 and 20 years • Two new jack-up rigs bought in 2012, one of them was put into operation on August 2012 (Naftogaz NJSC, Ukraine).
LNG: first LNG importation Terminal is being on project feasibility stage.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Ukraine: gas transportation and storage infrastructure High pressure pipelines - 23,600 miles Volume of natural underground gas storages — 1.12 Tcf
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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3. Opportunities
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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National Joint-Stock Company “Nadra Ukrayny”: the Hydrocarbon Vehicle of the State Geological and Subsurface Survey of Ukraine Cabinet of Ministers of Ukraine
State Geological and Subsurface Survey of Ukraine
NADRA UKRAYNY NJSC • Geological exploration; • License coordination; • Cooperation with IOCs; • Oil and gas production.
Other geological organizations
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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NADRA UKRAYNY NJSC: International activities
Visiting and Participation in oil and gas international conferences and exhibitions (including World Shale Gas-2010, 2011 and 2012 (Dallas, Houston, TX, USA);
Associate Member of American Gas Association (AGA)
Drilling equipment market research and visiting of leading manufacturers of drilling rigs and equipment (USA, Canada, China);
Cooperation with most of International Oil Companies for mutual activity in Ukraine (actual agreements and contacts with EXXON MOBIL, CHEVRON, SHELL, eni, PETROM, TOTAL, CNPC, PETROBRAS);
Consulting, project management in geology exploration for foreign companies;
Relations with World’s Leading companies engaged in offshore seismic exploration for their activity in Ukrainian sector of Black Sea (PGS, SGVeritas).
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Three options for cooperation between IOCs and Ukraine / NADRA UKRAYNY: 1. Production Sharing Agreement (PSA);
2. Foundation of Joint Venture with NADRA UKRAYNY for exploration and operation of concrete license areas.
3. Direct investments to some branch companies of NADRA UKRAYNY.
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Option 1: Production Sharing Agreement Preferred by IOCs as traditional scheme for elaboration of large projects in raw regions. In Ukraine the PSA should be approved by Cabinet of Ministers, which takes up to 12 months. Legal base: Ukraine Law about PSA #1039-XIV of 10.09.1999 Expected from NADRA: Licenses, Available subsurface database (logs, seismic, core, analysis etc.); Local and legal support of project; Optionally - equipment and staff; Expected from IOCs: Investments in form of equipment supply and money; Technologies, know-how; Optionally - equipment and staff. Benefits to both parties: products, shared between parties in agreed proportion might be sold on active Ukrainian market. Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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The PSA is signed at the World Economic Forum in Davos on Jan 24, 2013
Not granted in 2012, moved to next round of 2013
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Option 2: Joint Venture with NADRA UKRAYNY Legal base: number of Ukrainian laws starting from 1991 No coordination with Government, prompt start of project; Any selection of forms of investments from both parties (money, equipment, licenses, database, staff, etc.) First example: in June, 2012, Eni Group signed a Share Purchase Agreement with Nadra Ukrayny National NJSC and Cadogan Petroleum Plc to acquire a majority interest and operatorship in Westgazinvest LLC, an Ukranian Company founded in 2012 by the Nadra and Cadogan holding, subsoil rights to 9 unconventional shale gas license areas, located in Western Ukraine within Lviv Basin, encompassing a total acreage of approximately 1,500 sq. miles. Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Option 3: Investments to NADRA’s branch companies Very quick start of cooperation; Preferable directions for investments:
- Buying of equipment (drilling rigs, service, seismic and geophysical equipment); -
Subcontract Execution of works including seismic exploration for Black Sea shelf.
-
Money investment for big project (offshore rigs, midstream and downstream facilities etc.). Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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LOOK FORWARD Ukraine requires further studies in all hydrocarbon provinces and other areas to identify the oil and gas distribution in various geological structures and in the column therein. Specifically, it has to be studied the stratigraphic and tectonic controls, the host rock depth and composition, gas shale properties and fracturing, evaluation of gas resources and reserves, as well as economic viability to explore shale gas targets and their further development and commercial exploitation. All these activities are open for the foreign investors nowadays. Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
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Thank you very much for your kind attention!
Canada - Ukraine Oil & Gas Opportunities Workshop, Kyiv, February 25-26, 2013
