September 14, 2020

Partner to Increase Production in Ukraine

XP ensures the increase in production on Naftogaz depleted fields in the Western Ukraine.

From October 1, the international company Expert Petroleum will commence production enhancement operations at 13 depleted gas fields in the Lviv region. The company receives these fields for temporary use from Naftogaz Group provided that it will invest at least 1 BUAH and increase production by 300 mcm for 5 years.

On September 11, 2020, JSC Ukrgasvydobuvannya, a member of Naftogaz Group, signed a final set of documents with Expert Petroleum on cooperation under the terms of product enhancement contract (PEC). This enables the international company to commence operational activities at the Naftogaz fields as early as from October 1, 2020.

Since the beginning of cooperation in April 2020, Expert Petroleum representatives have conducted production and environmental audits of industrial facilities, agreed on a work plan and formed a staff for the new operator of the fields - Expert Petroleum Ukraine LLC. The staff is based on employees of the Stryi division, who moved from Ukrgasvydobuvannya.

“Partnership on PEC terms has proved its effectiveness worldwide, and this is the first experience for Ukraine. By launching this project, Naftogaz opens up new opportunities for investment in the oil and gas industry. This is a fundamentally new type of partnership. Under PEC terms, all the gas produced remains on the balance sheet of Naftogaz, with its assets transferred to the partner exclusively for temporary use for the duration of the contract. Production plans on the transferred fields are approved by the management committee, which consists entirely of Naftogaz representatives. Thus, the interests of our company and Ukraine are protected to the highest extent. They have an overriding priority,” said Oleksandr Romanyuk, Director of the Exploration and Production Division of Naftogaz Group.

Under the contractual terms, Expert Petroleum plans to invest about 1 BUAH in 13 depleted fields in the Lviv region. This will increase gas production by more than 300 mcm over the next 5 years.

“First of all, I would like to thank my colleagues from UGV for the fruitful cooperation during the last three months of mobilization, especially the representatives of the Lviv divisions for their openness to this new project and their progressive views. Indeed, we have done extensive preparations and are ready to launch the operations. An Expert Petroleum team of specialists who came to Lviv, during this difficult environment of travel restrictions and Covid19, and the local employees of the Lviv newly opened office, have prepared a detailed work program to not only enhance production but also reduce emissions and modernize the operations to make them more efficient for longer time. We feel confident that the PEC concept will bring value to UGV and establish a long term working relationship between our two companies,” said Michel Louboutin, co-founder and Chief Operating Officer of Expert Petroleum. In April 2020, the international company Expert Petroleum won Naftogaz's open tender for the PEC contracts to increase production at a group of fields in the Western region. As part of the signed contract, a new gas production operator, Expert Petroleum Ukraine LLC, was created.