Five Western gas enterprises still operating in Ukraine - Cub Energy, Kub Gas, Arawak Energy, Eni and Cadogan - are accounting for no more than 15 percent of total domestic production of natural gas. According to Alistair McBain, CEO of Arawak Energy, a small independent hydrocarbon company, one of the main reasons Ukraine’s oil and gas market was unattractive is the unpredictable royalties system.
In December 2014, parliament passed a bill which increased royalties on gas production to 55 percent, up from 28 percent. However, a year later, in December 2015, Ukraine’s parliament approved a tax bill that returned royalty rates to their original levels. Ukraine’s current royalties tax is based on a two-level system: companies extracting gas at depths less than 5,000 meters pay 28 percent, while companies extracting deeper pay 15 percent. Back in the 1970s the Soviet Union extracted in Ukraine 70 billion cubic meters of gas a year, which is more than 3.5 times the volume extracted today. Many experts, including McBain, believe Ukraine could not just become self-sufficient in gas, but even be a net gas exporter, provided it could bring in modern extraction technology, diversify its energy sources, and reduce wasteful consumption. Read more at http://www.kyivpost.com
In December 2014, parliament passed a bill which increased royalties on gas production to 55 percent, up from 28 percent. However, a year later, in December 2015, Ukraine’s parliament approved a tax bill that returned royalty rates to their original levels. Ukraine’s current royalties tax is based on a two-level system: companies extracting gas at depths less than 5,000 meters pay 28 percent, while companies extracting deeper pay 15 percent. Back in the 1970s the Soviet Union extracted in Ukraine 70 billion cubic meters of gas a year, which is more than 3.5 times the volume extracted today. Many experts, including McBain, believe Ukraine could not just become self-sufficient in gas, but even be a net gas exporter, provided it could bring in modern extraction technology, diversify its energy sources, and reduce wasteful consumption. Read more at http://www.kyivpost.com
