Ukrnafta : continues to restore production in 6 fields

Technical specialists of Ukrnafta continue to restore production at the 6 fields where operations were suspended earlier this year following refusal by the State Geological Service of Ukraine to extend a number of licenses. Currently, the company has restored 80 out of 132 production wells in Anastasievske, Artyukhivske, Korzhivske, Pivdenno-Panasivske, Rybalske and Zavodivske fields.

By restoring operations at the 6 fields, Ukrnafta has been able to increase daily production of oil, condensate and gas. Since the beginning of December Ukrnafta's average daily production rate for liquids has increased to 3.9 ktonnes or by 18% compared to that when the company had to suspend the fields. Similarly, the company has increased the average daily production rate for gas by 12% to 2.9 mln m.

However, despite the improvements the daily production rates of hydrocarbons are still below the levels before the suspension of operations. In 1Q2017, before the company had to stop the first of the six fields, Ukrnafta produced 4.1 ktonnes of oil and condensate and 3.5 mln m of gas per day.

Mavriky Kalugin, Member of the Executive Board and Executive Vice President for Upstream at Ukrnafta:

«Although we are doing everything we can to restore production, we knew that we would likely not return production to pre-shut in levels for various reasons - including damage to the formation due to well suspension operations, low reservoir pressures, and other equipment failures. In some of the gas fields, we may never recover. Because of these license problems and uncertainty of shut-in duration, we were forced to delay much needed improvements and investments».

Note to editors

In the course of 2017, 9 of Ukrnafta's production licenses expired. The company attempts to renew the licenses were blocked by the State Geological Service and between April and June 2017 Ukrnafta was forced to suspend production at 6 fields. The company won a number of court cases challenging the regulator's inaction concerning the extension of the licenses. In late October and November after the company received the extended licenses and mining allotments, Ukrnafta was able to restore operations at the suspended fields.

During the downtime, the company missed 92 ktonnes of oil and condensate and 76.3 mln m of gas. Ukrnafta missed close to UAH 1.4 bln in revenues, while the government missed circa UAH 450 mln in rent revenues alone.

In 2018, Ukrnafta will see 27 of its licenses expire which account for 45% of annual production of liquids and 25% of annual production of gas. The company has already submitted to the State Geological Service 23 applications to extend the licenses and will submit the remaining applications shortly.

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