Ukraine Invites Bids for Three PSA Blocks

Ukraine is about to offer three blocks in its latest production-sharing agreement (PSA) round, with 50-year concessions up for grabs. Bidders will have three months to prepare and submit their bids by the October 31 deadline.

The new three blocks are in proven petroleum provinces in the Dnipro-Donetsk basin, with well-developed midstream infrastructure and widely covered by geophysical surveys, said the Association of Gas Producers of Ukraine. It said the documentation was approved July 26 and would be published soon.

The Grunivska PSA is in the Sumy and Poltava regions and the initial five-year work period has a minimum commitment of $18.5mn and two wells; and the Ohtyrska PSA is in the Sumy, Poltava and Kharkiv regions and has the same terms. The Ikhnyanska PSA has a minimum commitment of $33.3mn and a minimum of three wells for the first five years. More details on bidding opportunities for upstream assets in Ukraine may be found here.

Ukraine could become a gas exporter, if it were able to develop its unconventional gas reserves fully, but some producers have lost money there, and there are questions about the enforceability of judgements against the state. PSAs however enjoy special status with respect to changes in the tax and other regulations and they allow for arbitration outside Ukraine. 

In July, the Kiev appellate court agreed the government owed JKX $12mn, but JKX said this could b subject to appeal in the supreme court and so its financial reports would ignore the decision "unles there is further clarity on the process for, and likely success of, enforcing collection.”