Drilling new gas wells in Ukraine is not economically profitable if the price of natural gas is less than $200 per thousand cubic meters. For comparison, gas at the Dutch TTF hub now costs about $150 per thousand cubic meters.
This was announced on Tuesday, November 10, by Ivan Hafich, Director for Exploration and Prospective Development of DTEK Naftogaz, at the 5th Kyiv Conference on Modern Methods of Drilling and Increasing Oil and Gas Production, Kosatka.Media reports.
“DTEK plans to drill four wells at depths of more than 7000 meters. We should have already started drilling them, but it has become economically unprofitable due to today's gas price. But when prices return to the level of $200 per thousand cubic meters, we will return to this issue,” said Hafich.
According to him, "this [obviously, the rise in the price of gas and the start of drilling – ed.] will happen around 2022 or early 2023."
Выступление Ивана Гафича на конференции. Фото: Kosatka.Media
Representatives of other private oil and gas companies are also talking about this. The General Director of Poltava Petroleum Company during the Sixth Ukrainian Gas Forum (held at the end of October 2020).
“Due to the pandemic and the associated price crisis, the production that is growing in private companies is likely to fall very quickly. We will see this already at the end of the second half of 2020. This is a reality to be understood. It's the same with prices. In 2018, the average gas price was $318. In 2019 – $211; in 2020, the lowest price in the summer was $56. There were no such prices for the last 20-25 years. The consequence of this is low marginality, low liquidity. Companies have less money left for development and investment. In the 2-3rd quarter of 2020, we did not drill new wells. We got to the point where we started to stop existing ones. It's just not profitable,” Hladun said.
What producers will do
Now the state-owned company Ukrgazvydobuvannya and private producers have embarked on a course to increase the resource base. In other words, they will be looking for deposits with large reserves, where in the future it will be possible to start production if necessary.
For example, now, Ukrgazvydobuvannya has 254 billion cubic meters of explored industrial reserves, and the volume of prospective resources is about 112 billion cubic meters. The next 5 years plan to maintain industrial reserves at the level of 230-240 billion m3 and increase the volume of prospective resources to 500 billion m3.
As a reminder, NJSC Naftogaz of Ukraine is launching a new gas exploration and production program. This is already its third version, which replaced the 20/20 Program and Tryzub.
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