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EITI Report of Ukraine 2016

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EITI Report of Ukraine 2016 EITI Report of Ukraine 2016 Table of contents 1 List of abbreviations and glossary of terms .............................................................. 7 2 Executive summary ............................................................................................ 10 3 Extractive industries transparency initiative in the world and in Ukraine ..................... 14 4 The methodology and approach used to prepare the EITI report................................ 16 4.1. Scope of the EITI Report .................................................................................. 16 4.2. Data collection ............................................................................................ 19 4.3. Audit and assurance procedures in extractive companies and public bodies .......... 20 4.3.1 Audit by extractive companies (including transportation of oil and natural gas)... 20 4.3.2 Auditing in executive bodies and public entities .............................................. 21 4.4. Data quality and assurance ........................................................................... 21 5 Background information on extractive industries .................................................... 23 5.1 Mining of coal.............................................................................................. 24 5.1.1 The role of the state in coal mining industry and budget support to the industry . 24 5.1.2 Coal reserves............................................................................................ 26 5.1.3 Significant explorations .............................................................................. 28 5.1.4 Information on special permits for use of subsoil ............................................ 29 5.1.5 Volumes of coal mining .............................................................................. 31 5.1.6 Exports and imports of coal ........................................................................ 34 5.2 Extraction of oil and natural gas ..................................................................... 37 5.2.1 The role of the state in oil and gas extraction industry .................................... 37 5.2.2 Oil and natural gas reserves ........................................................................ 41 5.2.3 Significant explorations .............................................................................. 45 5.2.4 Information on special permits for the use of subsoil....................................... 49 5.2.5 Volumes of oil and natural gas extraction ...................................................... 51 5.2.6 Oil and natural gas transportation ................................................................ 56 5.2.7 Exports and imports of oil and natural gas ..................................................... 68 5.3 Mining of iron ores ....................................................................................... 70 5.3.1 The role of the state in iron ores mining industry............................................ 70 5.3.2 Iron ores reserves ..................................................................................... 70 5.3.3 Significant explorations .............................................................................. 72 5.3.4 Information on special permits for use of subsoil ............................................ 72 5.3.5 Volumes of iron ores mining........................................................................ 74 5.3.6 Exports and imports of iron ores and its processing products ........................... 76 Page 2 of 352 EITI Report of Ukraine 2016 5.4 Mining of titanium ores ................................................................................. 80 5.4.1 The role of the state in titanium ores mining industry...................................... 80 5.4.2 Titanium ores reserves ............................................................................... 80 5.4.3 Significant explorations .............................................................................. 81 5.4.4 Information on special permits for use of subsoil ............................................ 81 5.4.5 Volumes of titanium ores mining.................................................................. 83 5.4.6 Exports and imports of titanium ores ............................................................ 84 5.5 Mining of manganese ores............................................................................. 86 5.5.1 The role of the state in manganese ores mining industry ................................. 86 5.5.2 Manganese ores reserves ........................................................................... 86 5.5.3 Significant explorations .............................................................................. 87 5.5.4 Information on special permits for use of subsoil ............................................ 87 5.5.5 Volumes of manganese ores mining ............................................................. 88 5.5.6 Exports and imports of manganese ores ....................................................... 89 5.6 Mining of fire clays ....................................................................................... 91 5.6.1 The role of the state in fire clays mining industry ........................................... 91 5.6.2 Fire clays reserves..................................................................................... 91 5.6.3 Significant explorations .............................................................................. 92 5.6.4 Information on special permits for the use of subsoil....................................... 92 5.6.5 Volumes of fire clays mining ....................................................................... 93 5.6.6 Exports and imports of fire clays.................................................................. 95 5.7 Mining of high-melting clays .............................................................................. 97 5.7.1 The role of the state in high-melting clays mining industry ............................... 97 5.7.2 High-melting clays reserves ........................................................................ 97 5.7.3 Significant explorations .............................................................................. 98 5.7.4 Information of special permits for the use of subsoil ....................................... 98 5.7.5 Volumes of high-melting clays mining ........................................................... 99 5.7.6 Exports and imports of high-melting clays ....................................................100 5.8 Mining of quartz sand......................................................................................101 5.8.1 The role of the state in quartz sand mining indusrty .......................................101 5.8.2 Quartz sand reserves ................................................................................101 5.8.3 Significant explorations .............................................................................102 5.8.4 Information of special permits for the use of subsoil ......................................103 5.8.5 Volumes of quartz sand mining...................................................................104 5.8.6 Exports and imports of quartz sand .............................................................106 Page 3 of 352 EITI Report of Ukraine 2016 5.9. Contribution of extractive industries to Ukrainian economy .................................107 5.9.1 Contribution to formal sector of economy ....................................................107 5.9.2 Contribution to informal sector of economy..................................................113 5.9.3 Extractive companies’ social and charitable payments....................................114 5.10. Quasi-fiscal operations .................................................................................117 5.10.1 Quasi-fiscal operations in extractive industries............................................118 5.10.2 Quasi-fiscal operations in coal mining industry ............................................120 5.11 Generation of government revenues from extractive industries by the regions of Ukraine ..............................................................................................................124 6 Statutory and fiscal regulation for extractive industries in 2016 ..............................127 6.1 Overview of the regulations applicable to extractive industries ..........................127 6.1.1. The Subsoil Code of Ukraine ......................................................................128 6.1.2. The Mining Law of Ukraine ........................................................................130 6.1.3. The Law of Ukraine “On Oil and Gas” ..........................................................130 6.1.4. Law “On the Natural Gas Market”...............................................................131 6.1.5. Tax regulations .......................................................................................131 6.1.6. Other regulations ....................................................................................132 6.2 Functions and responsibilities of public authorities...........................................134 6.3 Reforming of the regulatory and fiscal regime of the mining industry in 2016 ......137 6.4 State participation in extractive industries ......................................................145 6.4.1. Definition of “state-owned enterprises” ......................................................145
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