Burisma, Ukraine’s leading independent gas producer was one of the co-founders of the largest Ukrainian Association of Gas Producers. Other members also include UkrGasvydobuvannya, DTEK, Naftogaz, Geo Alliance Group, Smart Energy and Poltava Petroleum Company. In total, these companies produce 88% of all natural gas in Ukraine.
«Apart from co-founding the Association, Burisma was the first to recognize and voice the need for its creation. We wanted to unite responsible businesses, politicians, experts, journalists and civil society that support open and equal dialogue about the need for a transparent gas market in the country and integrating it into the European Energy Community around the idea of energy security”, noted the Advisor to the Board of Directors at Burisma Vadym Pozharskyi.
The Ukrainian Association of Gas Producers brings together gas companies to ensure the energy independence of Ukraine by increasing domestic gas production, creating favorable investment climate and implementing best industry practices. Its purpose is to create an effective interaction channel between the industry and governmental officials to assist Ukraine in its gradual transformation from an energy importer to a self-sufficient natural gas exporter.
Among the Association’s key objectives are: tax reform in the sector to increase its investment attractiveness, development of a modern and transparent legislation in the field of gas industry regulation; development and implementation of expert programs aimed at maintaining and developing gas production market in Ukraine; stimulating innovation, new ideas, initiatives, introduction of new technologies in the gas industry of Ukraine; exchange of experience, promotion and organization of training activities with the aim of training professionals in the field of gas production; expansion of social partnership with gas producing regions.
“Our common goal is to create a modern, high-tech, investment attractive, transparent and socially responsible industry. We believe in the huge untapped potential of the gas industry, and that by increasing domestic production of natural gas, creating a favorable investment climate and introducing world’s best industry practices, we will make our country energy-independent. Gas Industry in Ukraine has all the prerequisites to become the flagship of a stable domestic economy. To do this, we need to consolidate efforts from the state, business and society,” said the Chairman of the Ukrainian Association of Gas Producers Daniel Maydanik.
With necessary regulatory and investment environment, according to the Association’s estimates, the annual gas production volumes in Ukraine could increase from 20 billion cubic meters to 27 billion cubic meters by 2020. By 2025, this figure could exceed 30 billion cubic meters. In case of going forward with implementation of energy-efficient technologies, we will manage to minimize or completely refuse from gas imports.
Symbolically, the representatives of Ukraine’s largest gas producers announced the launch of the Association at the very first Ukrainian Investment Forum 2016, opened on March 23 in Kyiv. The forum was organized with focus on investment opportunities in the Ukrainian gas market. The CFO at Burisma Alexander Gorbunenko joined the panel on “Gas production in Ukraine”.
“Over the last year and a half, the industry has struggled for its existence. A lot of efforts have been put into rectifying the damage done, following a series of wrong decisions, including the increase of rental rates by more than twice, introducing abrupt and non-market solutions that promote monopoly position of Ukraine’s largest state company and the demand for insurance stocks. At the same time, we call for more effective work in the upcoming months to get back to the previous growth dynamics, improve the investment attractiveness of the industry and see the return of major global players in 2017-2018. We need professional and informed decisions, mature and clear legal environment, subject to implementation of the new law and market principles, adequate and long-term tax treatment”, noted Alexander Gorbunenko.
Earlier, Minister Demchyshyn talked about the goal to reach gas production volumes circa 27 billion cubic meters by 2020, where 7 billion cubic meters are being produced by private gas companies that have continually demonstrated to the state and civil society that they are fully capable to increase the production of natural gas, even in difficult socio-economic conditions. Amid a general decline in the industry, private gas production in 2015 increased by 17% to 3.9 billion. As a result, every citizen of our country benefits from the growth in private gas production sector, since this business has always stayed socially responsible. For instance, tax payment of the Association member-companies in 2015 amounted to more than UAH 22 billion or 4.5% of total budget revenues. Circa USD 68 million were allocated on social programs, which secured smooth operation of dozens important municipal objects in Ukrainian towns and villages.
Focus on industry needs and concerns as well as concrete governmental strategy will help attract much needed international investments and latest technology. According to the Association, the need for investment in the sector is estimated at circa $ 3.5 billion and a number of new wells should amount to 250 per year.
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