Natural Gas Production outside of Ukraine

From the economic point of view, the most promising resources of both gas and oil are concentrated in Middle East, North and Central Africa. The countries located in these regions and possessing significant hydrocarbon reserves are, as a rule, underdeveloped, raw-material oriented economies mainly based on production of underground resources. The economic development level of this countries make their governments improve investment climate and implement programs to significantly increase oil and gas production, and develop a proper infrastructure. The Ukrainian companies, with their high technical and human resource potential, can have competitive advantages owing to lower cost of services and works. This will be fostered by the traditionally positive relations of countries in this region with the former USSR republics, including Ukraine. NJSC Naftogaz of Ukraine should play a key role in advancing into international gas production markets.

Due to the fact that in the future virtually all potential for oil and gas production growth will be concentrated in such countries as Saudi Arabia, United Arab Emirates, Algeria, Kuwait, Libya, Russia, Kazakhstan, Iran and, possibly, Iraq and Angola, they are considered as primary candidates for obtaining licenses for exploration and subsequent development of gas fields.

Based on the feasibility studies of projects prepared by NJSC Naftogaz of Ukraine, gas production by Ukrainian companies outside of Ukraine will begin in 2010 and will be growing every year up to 11.6 bcm in 2030.

Implementation of projects concerned with gas production outside of Ukraine should be carried out as follows: it should be accompanied by the participation of Ukrainian specialized companies in implementing projects related to oil and gas infrastructure and oil and gas transmission systems upgrading and development: procurement of oil field equipment; provision of services in the oil and gas sector; exchange of experience and experts with a view to personnel training; provision of technical and informational support. The participation of Ukrainian oil and gas producing companies in the development of oil and gas resources in foreign countries based on concession and product distribution agreements should become the basic line in such activities.

Forecast Annual Natural Gas Production by Ukrainian Companies outside of Ukraine, bcm/year (base-case scenario)

Forecast Annual Natural Gas Production by Ukrainian Companies outside of Ukraine, bcm/year (base-case scenario)

Based on the optimistic scenario, natural gas production outside of Ukraine is forecast at 2.5 bcm in 2010, 6.2 bcm in 2015, 6.9 bcm in 2020, and 12.2 bcm in 2030, and based on the pessimistic scenario, 2 bcm in 2010, 5.5 bcm in 2015, 6.4 bcm in 2020, and 10.9 bcm in 2030.

Technical and Economic Indicators for Natural Gas Production Projects of NJSC Naftogaz of Ukraine outside of Ukraine

Indicator Country
Kazakhstan Algeria Libya
Gas resource, billion cubic meters 16,1 16,2 18
Oil resource, million tons     63
Expected gas production, billion cubic meters 16,1 15,4 14,8
Expected oil production, million tons     53,1
Total project cost, million USD 283 350 868
Including Ukrainian investor 209 304 868
Cash flow, million USD 183 357 1690
Discounted cash flow
million USD
74,5 97,3 404,6
Payback period 6 7 7