Ukraine may in seven to ten years be able to increase its own hydrocarbon production to a level at which the country can supply its needs without the need for imports, the head of the country's state geology and subsurface resource service Eduard Stavytsky has said.
"Today, the state fund of subsurface resources is about 1.1 trillion cubic meters of natural gas and about 130-150 million tonnes of oil with gas condensate. In from seven to ten years, Ukraine will be able to fully supply itself with gas and oil, and need to import energy resources," Stavytsky said during an interview with Interfax.
The main potential for boosting production are offshore fields in the Black Sea and Sea of Azov, he said.
"Perhaps two thirds of the increase in resources [could be] on the shelf – about from two to ten trillion cubic meters," he said.
Serious work is being done to study the potential of large areas containing deposits of natural gas from unconventional sources in the Donetsk-Dnepr basin and Dnieper-Donets depression, he said.
"The increase potential is pretty serious. But this matter has to be approached cautiously, so that in a hundred years the resources are not depleted and our descendants left with ’empty’ land," Stavytsky said.
Speaking about extracting gas from non-traditional sources, Stavytsky said that the seriousness of the prospects are confirmed by the interest in this area shown by world giants such as Shell, which has already prepared a project for work, recoupment, and extraction at the Yuzovsky gas field and is ready in the next three years to pump several billions of dollars into opening it.
"According to the low case scenario, they are planning in ten years to be extracting around 8-10 billion cubic meters of gas per year there," Stavytsky said.
Shell is better prepared to compete for this field than anyone, and the delay in the tender is due to local authorities not freeing this field for auction, Stavytsky said.
"Donetsk Regional Council has already issued permission. I hope that Kharkiv Regional Council will make a positive decision in the latter part of August, and at the end of October or beginning of November we will have a competition," he said.
The Yuzovsky field is huge and very promising, so it is not surprising that it interests such companies as ExxonMobil and DTEK Neftegaz, Stavytsky said. The latter is financing operations at fields nearby, he added.
"In Western Ukraine, investors, particularly Chevron, are showing interest in the Olessky field [located in Lviv, Ivano-Frankivsk, and Ternopol regions]. This is [a field] with an area of around seven thousand square kilometers. Unfortunately, putting it up for a tender under a PSA [production sharing agreement] has for incomprehensible reasons been blocked by local regional councils," Stavytsky said.
The geology and subsurface resource service will be working to move issues of a similar nature in the use of subsurface resources directly to the highest levels of government: the president, the Verkhovna Rada (Ukraine’s parliament), and cabinet of ministers, Stavytsky said.
Ukraine produced 3.5 million tonnes of oil and gas condensate in 2010 (down 10.3%), and 20.5 billion cubic meters (bcm) of natural and associated gas (down 4%). The country increased natural gas imports 35.7% to 36.5 bcm, or 17.7% to $9.39 billion in terms of price. Ukraine imported 5.6% more oil in 2010 – 7.6 million tonnes (39.5% more at $4.17 billion). Imports of these energy resources, as well as coal, represented 25.3% of all imports into Ukraine, including gas imports – 15.5%.
Domestic gas consumption in the country increased 11.2% last year to 57.7 bcm. Overall domestic oil and oil-product consumption is estimated at an annual 23 million tonnes of oil.
