Q Club

Characteristic of Internal and External Sources

Initial crude oil reserves in Ukrainian deposits total 421.9 million tons, and gas condensate, 138.6 million tons. As of 01.01.05, the remaining extraction oil reserves total 116.0 million tons, and gas condensate, 69.8 million tons.

A number of factors make the production conditions at the deposits that have by now been brought into development ever more complicated. Most of the oil deposits have initial reserves less than 1 million tons, and only 6 deposits (Buhruvativske, Hlynsko-Rozbyshivske, Boryslavske, Hnidyntsyvske, Dolynske, Lelyakivske) had initial reserves over 20 million tons. These 6 deposits currently provide about 22% of total oil production.

Ukraine's oil production is facing problems also due to the fact that more than 70% of its oil reserves fall under the 'hard to extract' category by such criteria as reserves depletion, inundation, viscosity, and reservoir properties. They are categorized as low-permeable reservoirs, multipay fields with high lithologic heterogeneity, both in terms of area and pay zone thickness. Two thirds of such reserves are concentrated in deposits occurring at depths more than 2,500 meters. Virtually all reserves in the Precarpathian fields are hard to recover. The development of hard-to-recover reserves require specific, scientific-intensive and high-cost processes and technology employed.

It is planned to increase prospect drilling up to 185,000 meters a year by 2010, which is almost 6 times more than the actual oil prospect drilling in 2005. The calculations show that over the forecast period (2006—2030) the explored reserves of oil and gas condensate can be incremented by 63 million tons of oil under the base-case scenario, and by 150 million tons under the ambitious scenario.

Increasing the oil exstractery ratio and stimulation of hydrocarbons production can be considered as important tasks for the whole projected period. An increased oil recovery and stimulated production will provide up to 7% in total oil production.

Production of oil with gas condensate in Ukraine will be 5.2 million tons in 2010, 5.5 million tons in 2015, 5.5 million tons in 2020, and 5.8 million tons in 2030 based on the optimistic scenario; 4.6 million tons in 2010; 4.7 million tons in 2015, 4.6 million tons in 2020, and 4.5 million tons in 2030 based on the worth case scenario; 5.1 million tons in 2010, 5.3 million tons in 2015, 5.3 million tons in 2020, and 5.4 million tons in 2030 based on the base-case scenario.

Oil and gas production over the forecast period is expected to be carried out mainly by domestic companies.

Foreign investment and state-of-the-art technologies of international oil and gas companies will be used for geological survey works and natural gas and oil production operations in the deep-water area of the Black Sea shelf.

The primary solutions to oil production sector problems are:

  • to discontinue the practice of suspending provisions of special laws, in particular, the Code of Ukraine «On the Bowels», Law of Ukraine «On Oil and Gas» and «On Rental Payments for Oil, Natural Gas and Gas Condensate» by Law of Ukraine on State Budget, which practice is detrimental to the development of the domestic oil and gas producing industry;
  • to facilitate the procedure for granting land plots for the construction of oil and gas wells and operations-related production facilities;
  • to complete delimitation of boarders with Russia and Romania on the Black Sea and the Sea of Azov;
  • to make more specific the program for the development of the Sea of Azov and Black Sea shelves;
  • to develop a legislative and regulatory framework promoting wide-range introduction of scientific-intensive and high-cost production stimulation and hydrocarbon production enhancement technologies.