Ukraine plans to boost gas output royalties 63.4% in 2007
>>>What so worried te politicians a year ago??? Bird flu??? It would spread w/o any constraint. Something like that. Well this week we have seen something much more virulent, the dreaded royalty tax on NG production. From the frozen tundra of Canada, to the GOM, and now the Black Sea, this contagion has rapidly spread, reducing exploration and production. In its later stages it curtails governmental revenues, and eventually kills the host.
Memo to self:
Isacc Newton said it best - for every action there is an equal and opposite reaction. As royalties rise and production drops, will your domestic American land assets rise or fall in value??? Hold em tight.
Wasn't Ukrain on its knees a year ago because Putin was gigging them on NG?? Now they are going to gig themselves. WWIII isn't going to be held in the Middle East. It will be in Europe as usual, and start over NG.
Frank - you loving this action or what???<<<
Kiev (Platts)--15Nov2006
The Ukrainian government plans to hike 63.4% royalties on extraction of natural gas to 50 hryvnias ($9.9) per 1,000 cubic meters in 2007, according to the finance ministry. Ukraine is a major transit country for gas into Europe.
The plans led to an outcry from the country's two major producers of natural gas that had warned the move, if implemented, would force them to postpone most of Black Sea offshore gas development projects.
The government also plans to increase royalties on crude oil and gas condensate production from the depth of less than 5,000 meters by 24% to 1,090 hryvnias ($215.8) per ton.
The government also asked Parliament to boost royalties on crude oil and gas condensate production from the depth of more than 5,000 meters by 24.3% to 404 hryvnias ($80) per 1 mt, according to the draft 2007 budget prepared by the finance ministry.
OFFSHORE FIELDS IN JEOPARDY
For offshore fields, the government suggested introducing royalties on natural gas extraction at 10 hryvnias ($2) per 1,000 cu m in 2007, up from zero in 2006, according to the draft.
ChornomorNaftoGaz, Ukraine's only producer of oil and natural gas from offshore fields in the Black Sea, warned on Wednesday the move would force the company to stop development of the recently discovered Odessa gas condensate field.
The company urged the government not to introduce the royalties on offshore production. "Otherwise the company would have to postpone indefinitely development of the most promising gas condensate field in Ukraine, an important part of the country's energy security program," ChornomorNaftoGaz said.
The Odessa gas condensate field and nearby areas, located near Odessa in the North-Western part of the Black Sea, are estimated to contain up to 50 billion cu m of natural gas. The company plans to produce 1 Bcm/year of gas from the field beginning from 2008.
The royalties would also force the company to postpone development of a big Subbotin offshore oil field.
Subbotin field, located in the South-Eastern part of the Black Sea, contains about 100 million mt of crude oil. The field may help ChornomorNaftoGaz to boost oil output by 1.5 million mt annually within the next several years, the company said.
The Crimean-based ChornomorNaftoGaz produced 1.06 Bcm of gas in January-October, up 1.8% year-on-year.
OTHER FIRMS JOIN PRESSURE
Other Ukrainian energy companies joined ChornomorNaftoGaz in putting pressure on the government to scrap the initiative.
UkrGazVydobuvannya, UGV, Ukraine's biggest natural gas producer, warned Wednesday it would dramatically reduce natural gas output next year if Parliament increases the royalties.
UGV warned it would have to pay 1.86 billion hryvnias ($368 million) in royalties and geological survey fee in 2007, which is 569 million hryvnias ($112.6 million) more than in 2006.
"As a result, the company's investments in geological surveys and development of gas fields will fall by 50%, leading to decline in gas extraction," UGV said in a statement.
UGV, which operates more than 110 gas fields throughout Ukraine, produces more than 70% of the country's total natural gas output and about 18% of oil and gas condensate output.
UGV increased gas extraction 0.3% year-on-year to 12.18 Bcm in January-October, output of crude oil and gas condensate rose 3.2% year-on-year to 684,000 mt.
GAS OUTPUT UP IN OCTOBER
Ukraine's overall natural gas output in October increased 4.7% on the month to 1.76 Bcm, up from 1.68 Bcm in September and up from 1.74 Bcm extracted in October 2005, an energy and fuel ministry official said Wednesday.
Ukraine produced 17.3 Bcm of natural gas in January-October, up 1.6% from 17.03 Bcm produced a year ago.
Ukraine's natural gas imports decreased 27.1% on the month to 4.27 Bcm in October, down from 5.87 Bcm imported in September and down from 5.02 Bcm imported in October 2005, the official said.
In January-October Ukraine imported 50.23 Bcm of natural gas, down from 55.3 Bcm imported in January-October 2005.
Ukraine's natural gas consumption in October increased by 41.7% on the month to 5.33 Bcm, up from 3.76 Bcm consumed in September.
Ukraine consumed 57.73 Bcm of natural gas in January-October, down from 58.94 Bcm consumed a year ago. |
