Future Opportunities for U.S. / International Exporters and Investors
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UKRAINIAN UPSTREAM FUTURE OPPORTUNITIES FOR U.S. / INTERNATIONAL EXPORTERS AND INVESTORS NEW ORLEANS, LA Copyright © 2019 Exploration & Production Ltd GENNADII KOBAL EU & UKRAINE EUROPE UKRAINE Copyright © 2019 Exploration & Production Ltd OIL&GAS REGION OF UKRAINE KYIV Copyright © 2019 Exploration & Production Ltd REGIONAL STRUCTURE OF PRODUCTION Copyright © 2019 Exploration & Production Ltd PRODUCTION Natural Gas Production Oil Production in Ukraine, in Ukraine, 2012-2019*, BCM 2012-2019*, million ton Copyright © 2019 Exploration & Production Ltd OIL&GAS INDUSTRY Gas Production in Ukraine 2010-2018, BCM Gas production in Ukraine remains stable at the same level - 20-21 BCM / year. In 2019 for the first time there was a re- duction in production over the last 5 years The share of private producers is growing and in August 2019 reached 23% Oil & Condensate Production in 2010-2015, Million ton Oil & Condensate production has been growing for the second year in a row, and this year it will yield 2.4 million ton. This is the highest production output during the last 4 years. Most to the nation’s produc- tion increase was contributed by Ukrnafta and private producers. Copyright © 2019 Exploration & Production Ltd OIL&GAS INDUSTRY Gas Production UGV Oil&Condensate Production UGV Since 2016, UGV has been steadily increasing natural gas production. In 2019, natural gas production will slightly drop for the first time over the years. Gas Production UKRNAFTA Oil Production UKRNAFTA Ukrnafta suc- cessfully stabi- lized their natural gas production in 2018, and now is increasing their oil production. Copyright © 2019 Exploration & Production Ltd OIL&GAS INDUSTRY The largest production increase among private companies in 2018 was shown by UNB, 37% more than in 2017. UNB’s oil production increased by 69%, and totaled 72,000 ton. Last year four new wells were commissioned. Burisma Group, the second largest privately-owned com- pany, produced nearly 1 BCM in 2018. This company is commissioning 20 new wells by the end of 2019. Burisma’s drilling contractors include the two leading private drilling companies: Poltava Drilling Com- pany and Ukrburservice. The largest natural gas production company during the last 5 years remains DTEK Naftogaz, which accounted for almost 40% share in private gas production of Ukraine. ZakhidNadraServis Group is the leading The company has further potential to increase its natural private producer in the Western Ukraine gas production Copyright © 2019 Exploration & Production Ltd DRILLING MARKET In 2019, 18 drilling companies operate in Drilling Volumes in 2008-2018, forecast until 2022, th meters Ukraine. The total drilling&workover fleet is 130 rigs, of which only 80 rigs are for drilling. Over the last 3 years, private drilling companies have expanded their fleets with additional 8 heavy drilling rigs: Ukrburservice – 2 rigs, PBC - 3 rigs, SMS – 1 rig, Goryzonty – 1 rig, and Energofinance – 1 rig. Ukrgasvydobuvannia has already The 8 Ukrainian drilling companies operate modern rigs (drilling at received 12 out of 20 drilling rigs 3000-6000 m) bought from international rig manufacturers include: with a capacity of 450 tons 1. Poltava Drilling Company 5. Region 2. Ukrburservice 6. DC Gorizonty (2 rigs from Bentec + 10 rigs from 3. Specmekhservice (SMS) 7. Naftogazburinnya Honghua) 4. Energofinance 8. UGV Copyright © 2019 Exploration & Production Ltd UGV DRILLING, TH METERS Copyright © 2019 Exploration & Production Ltd DRILLING MARKET Foreign drilling companies in Ukraine, the number of drilling rigs 320-450 tons The 4 interantional drilling contractors operating their 320-450 ton drilling rigs in Ukraine include: 1. EXALO (Poland) Engineering (China) 2. Crosco (Croatia) 4. Belorusneft (Belorus) 3. Xin Jiang Beiken Energy Maximum drilling depths by foreign companies in Ukraine in 2018, m Beiken drills for UGV, Crosco drills for PPC EXALO drills for Cadogan Petroleum Belorusneft drills for DTEK Oil&Gas. Copyright © 2019 Exploration & Production Ltd DRILLING MARKET Drilling Cost Breakdowns % Cost Breakdown of Services for Cost Breakdown of Services for Drilling 3000m-5000m Deep Wells ,% Drilling over 5000m Deep Wells,% Cost Benchmark for Drilling VS Services,% Copyright © 2019 Exploration & Production Ltd COILED TUBING Number of Coiled Tubing Operation for Year Service Price of Tender, Cost per one Opera- Number of Number of Coiled Tubing OperationUGV in 2018 for-2019 UGV in 2018-2019 Company $ thousand tion, $ thousand Operation 2018 Tacrom Ukraine 1 287 76 17 DC Goryzonty; 37 Tacrom Ukraine 1 632 74 22 Tacrom Ukraine; Tacrom Ukraine 1 632 74 22 178 Service Oil 1 852 74 25 Burova Burova Tekhnika 1 779 71 25 UGV Budget for Tekhnika; 2019 DC Goryzonty 2 800 76 37 2018 Coiled 103 Tacrom Ukraine 3 104 80 39 Tacrom Ukraine 3 040 78 39 Tubing Operations Tacrom Ukraine 3 140 81 39 was $ 8.2 million, Burova Tekhnika 3 104 80 39 for 2019 Coiled Burova Tekhnika 3 036 78 39 Service Oil 2 936 75 39 Tubing Operations Service Oil; Service Oil 3 108 80 39 - $ 24.3million. 103 The average cost of one coiling operation for UGV 2018-2019, UAH thousand Copyright © 2019 Exploration & Production Ltd HYDRAULIC FRACTURING Company 2016 2017 2018 2019 HF Operations in Ukraine UGV 16 101 173 300 UKRNAFTA 0 0 17 15 Burisma 0 0 3 5 PPC 0 4 0 0 Ukr-Az-Oil 0 0 1 0 Cost of the HF Operation for UGV in 2018, min-max, th UAH During 2016-2018 more than 300 hydraulic fracturing operations were performed in Ukraine. Including nearly 190 hydraulic fracturing operations in 2018. The leader in using hydraulic fracturing operations is the UGV (about 170 frac jobs per year). Ukrnafta has its own hydraulic fracturing fleet, and in 2018 conducted 17 hydraulic fracturing operations. Copyright © 2019 Exploration & Production Ltd NATURAL GAS MARKETOF UKRAINE: PRODUCTION, IMPORT & PRICES Copyright © 2019 Exploration & Production Ltd NATURAL GAS MARKET BALANCE Copyright © 2019 Exploration & Production Ltd STRUCTURE OF CONSUMPTION IN 2018, BCM Copyright © 2019 Exploration & Production Ltd CONSUMPTION BY INDUSTRY, BCM Copyright © 2019 Exploration & Production Ltd NATURAL GAS PRICES IN UKRAINE IN 2018 - 2019, UAH PER 1,000 M3 Copyright © 2019 Exploration & Production Ltd IMPORT GAS PRICES US$ PER 1,000 M3 Copyright © 2019 Exploration & Production Ltd INFORMATION WEEKLY #40 (177) MONTHLY Welcome to Ukraine! September, 2019 September 30 – October 6, 2019 Carpathian Oil & Gas Conference 2020 - Lviv, May - 2020 - ditions previously agreed. Prime Minister of DAILY GAS Odesa Offshore Conference 2020 - Odesa, September - Ukraine Oleksiy Honcharuk noted that the 3 Жовтня 2019 loss of investor confidence would be the worst that could ever happen. In turn, Min ister of Energy and Environment Oleksiy Or- zhel noted that his Ministry's position was to keep the tax regime unchanged forAverage the up monthly quotation of oil Brent (ICE Index), $/b coming 5 years. The Cabinet of Ministers of Ukraine plans to maximize transparency with active use of online auctions as incentive to attract inves- territory of Ukraine after 2019 was also an - Oil and Gas Productiontors to hydrocarbon production projects in nounced to be held on October 28. Overview, August 2019Ukraine. According -to Honcharuk, ВнутрішнійUkraine ринок. З наближенням кінця тижня активність Ціна на ресурс жовтня в Україні, грн/тис куб м Another important event was the transition of is gasstriving produc to attract more investors,учасників but on на газовому ринку України знизилася. Через різ - - Ukrtransgas to the determination ofAfter price for the change of politicaland powerpolitical oil - mutuallyany favourable terms both to Ukraine natural gas on intraday basis insteadin Ukraine, of the the gas industry is turbu- of ке зростання цін на хабах сьогодні, більшість українських and foreign investors. The Minister of Energy monthly one, as it was before. The purchaseTraditionally, трейдерів зайняли вичікувальну позицію. «Ринок завмер в lent. very sensitive to - and Environment Oleksiy Orzhel plans to use - price and the marginal purchase / sale price tion is After an absolute- rebootmarketing technologiesочікуванні, to attract foreign всі inчекають- якоїсь більш довгострокової тенден - caps on natural gas will be used to further changes. vestors to Ukraine's fuelції щодоand energy зростання market. чи падіння цін у Європі, оскільки ми вже determine the payment for imbalances and In a private conversation,бачили Primeяк одного Minister дня ціни різко падають, а потім наступно will be published daily in thepolitical user's account power in Ukraine, similar - Oleksiy Honcharuk- Average told ExPro monthly that the Cabquotation gas hub in GPL, €/MWh on the Information Platformchanges starting Octoberwill come to the production го дня так само різко зростають» - прокоментував ситуацію News Review inet plans to attract investors to the Black 1, 2019. The last monthly marginal price for один з трейдерів. Last week, UGTS Operator LLC applied for industry. Sea shelf. However, according to Honcharuk, the purchase of natural gasfirst for September major step that can contribute certification as a gas transmission sys The this shouldПротягом be in the form дня of продавці auctions, not газу in в Україні підвищили власні ціни 2019 was 5 502.54 UAH / Mm3. The margin tem operator to the National Commission to a dramatic deterioration Currentlyof the situ thethe formна of ресурс a Product жовтня Sharing близько Agreement. на In 100 - 200 грн/тис куб м і на al selling price was 4 502.08 UAH / Mm3. - for State Regulation of Energy and Utilities addition,a the Dolphin shelf hydrocarbon rich - Also, last week theyation made in athe number gas of market im is the review прикінці дня ціни на ресурс жовтня коливалися в діапазоні (NCREU). The certification should be com fields should be divided into 4 separate lots. portant political ofstatements the current regarding rent hydro rates. provides for 5 000 – 5 200 грн/тис куб м. Діапазон цін на ресурс листопада Ціна на газ в ПСГ в Україні, грн/тис куб м pleted by the end of December, so Ukrtrans- - carbon production.Parliament On August has30, a People'sreceived for the review залишається широким.