Ukraine has launched its first round of international O&G online auctions

Map of Ukraine's licensing round auction. Photo: Association of Gas Producers of Ukraine.

KYIV, Ukraine --  Ukraine has launched its first oil and gas licensing round online. Ten parcels were put up for the first round of international oil and gas auctions in the ProZorro.Sale system.

"In the future, we plan to put up from 5 to 10 lots monthly, and this will include not only oil and gas, but also different deposits with various minerals. In 2019, we plan to hold more than 10 auctions online, "- said the Acting Chairman of the State Geological Service of Ukraine Oleg Kyrylyuk.

First Deputy Minister of Economic Development and Trade of Ukraine Maksym Nefyodov said:

"The launch of transparent oil and gas licensing rounds is a significant step forward in the reform of public sales. ProZorro. Sale System is already successfully selling the assets of banks, state-owned companies, utilities, and is fully ready to sell oil and gas licenses".

Executive Director of the Association Roman Opimakh noted that next year oil and gas auctions would take place in 15 countries.

"Fierce competition in the world requires Ukraine to make every effort to compete for investors and be interested with our proposals of parcels. I am sure that the key to the successful conduct of oil and gas licensing rounds in Ukraine is their promotion on the international level, as well as effective communication with the bidders with the involvement of the highest state officials ".

"We invite all interested buyers not to delay and register on the platforms, study lots and prepare for the first electronic auctions," - said Acting Director of the State Enterprise "PROZORRO.SALE" Oleksiy Sobolev.

The State Geological Service has prepared 30 oil and gas blocks in 10 regions of Ukraine for online actioning at Prozorro.Sale. The total acreage of the parcels is 4,63 Mkm². Auctions will take several rounds.

On the first round, which has been announced on December 6, 2018:

• 10 blocks are put up with a total area of 1.81 Mkm² in 6 regions (Poltava, Kharkiv, Ivano-Frankivsk, Chernivtsi, Luhansk, Odesa).
• All blocks are located within well-explored oil and gas basins with extensive gas transportation infrastructure and are well investigated by seismic surveys.
• Nine licenses are combined for exploration and production of hydrocarbons for a period of 20 years, and one license for exploration, for five years.
• The potential resource base of 10 blocks is 86.26 Bcmg and 16.3 MMt of liquids. One block has proved oil and gas reserves of more than 1.5 MMt of liquids and 500 MMcmg.
• The initial price of nine lots does not exceed $721,000 (UAH 20 million). Starting price of one block is $18 million (UAH 500 million).
• The winner of the auction is determined through the bidders that will offer the highest price. In addition, each block provides minimum exploration program requirements:  interpretation of legacy seismic, conducting of new seismic and one well drilling. This should help to more effectively develop the blocks and prevent the emergence of "sleeping" licenses.
• Interested parties will have 90 days to view the information and submit the application.
• The online auction will take place on March 6, 2019.