Oil Production Outside of Ukraine
Since Ukrainian oil reserves that are concentrated at large deposits have a high depletion rate (over 70%), and forecast oil resources are assigned to the deposits that have complicated geological structure, insignificant reserves, non-commercial wells and occur at significant depths, the development of such oil reserves is carried out by employing special equipment and high-cost technologies with resultant high oil production costs.
Having the proper human resource potential and financial capabilities, advantageous geographic location compared to the countries possessing significant oil reserves within the range of transport operations, Ukraine – in addition to the development of its own oil producing industry – should be working actively on developing such reserves on the basis of international cooperation, entering into product distribution agreements.
Given the contracts signed (as well as those being at different preparation stage) and based on assessment of resources available in the countries NJSC Naftogaz of Ukraine intends to cooperate with, calculations were made with regard to forecast oil production. The calculations show that 3.6 million tons of oil may be produced outside of Ukraine as early as in 2010, and this figure may further increase up to 9.2 million tons. This significantly exceeds oil (with gas condensate) production volumes planned for the development of domestic reserves over the same period of time.
Oil with gas condensate production outside of Ukraine is forecast at 3.7 million tons in 2010, 4.2 million tons in 2015, 5.8 million tons in 2020, and 9.9 million tons in 2030 based on the best-case scenario; will increase from 3.3 million tons in 2010 to 7.7 million tons in 2030 based on the worth-case scenario; 3.6 million tons in 2010, 4.0 million tons in 2015, 5.6 million tons in 2020, and 9.2 million tons in 2030 based on the base-case scenario.
Forecast for Oil Production by Ukrainian Companies outside of Ukraine
The table below presents key technical and economic indicators for specific projects developed by NJSC Naftogaz of Ukraine.
Oil Production Projects Technical and Economic Indicators
|Oil resource, million tons||20,5||18,1||63||55|
|Expected oil production, million tons||18,2||16,6||53,1||54,6|
|Project value, million USD|
|Cash flow, million USD||705,6||552,9||1690,1||7044,5|
|Discounted cash flow, million USD||194,6||186,1||404,6||1432,6|
|Payback period, years||6||5||7||10|
In such a way, active development of foreign oil resources and their refining at Ukrainian refineries with light oil output being at least 90% will provide a market share at the level of 16% beginning from 2010, and up to 18% in 2030. This figure, taken together with domestic reserves of crude oil will be 42% and 36%, respectively.
Establishing a national vertically integrated oil company on the basis of NJSC Naftogaz of Ukraine, which will have upgraded and new capacities sufficient for refining domestically produced oil and production of oil outside of Ukraine will be an important factor ensuring efficiency of works related to oil production abroad.