Why state gas production decreased: expert's explanation

The total gas production in 2019 decreased by 1.1% and amounted to 20.7 billion cubic meters. Production in the state-owned Ukrgazvydobuvannya fell by 3.4%, private companies increased their volume by 5%.

Such data was voiced by president of the Association of Subsoil Users of Ukraine Roman Storozhev in an interview with Kosatka.Media.

“A high indicator (70%) of depletion of UGV fields is one of the main factors (decline in production in a state-owned company – ed.). Natural decline can only be stopped by the commissioning of new deposits and the intensification of old ones”, the expert said.

Storozhev reminded that in recent years there had been problems with the local authorities in blocking the issuance of new special permits for gas production by local authorities; moreover, according to statistics, most licenses had always been issued to private companies. There was also a problem with the failure of tenders in Prozorro, problems with contracting organizations.

Then there were public statements by Naftogaz’s leadership that Ukrgazvydobuvannya took on the implementation of unrealistic tasks under the 20/20 program. Together, all these factors led to the figures that we have today.

In addition, last year was extremely unfavorable in terms of conditions for gas producers. Wholesale gas prices plummeted all year.

“But, despite this, we began 2019 in active drilling. Both Ukrgazvydobuvannya, and Ukrnafta, and private companies actively announced the commissioning of new wells. Due to this, given the trend of gas prices falling, it is very good that the decline was only 1%”, Storozhev said.

 

Tags: gas, Ukrgazvydobuvannya, gas production

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