CIS-FSU Chapter Event – Ukraine 2019 Licensing Rounds: A Big Attraction for Oil & Gas Investors

On 15 February 2019, the CIS-FSU Chapter Event – "Ukraine 2019 Licensing Rounds: A Big Attraction for Oil & Gas Investors" – took place in Kyiv. It was organised by the Association of International Petroleum Negotiators and the Association of Gas Producers of Ukraine, and sponsored by Redcliffe Partners and EY. It covered two major events that are to take place in the Ukrainian oil and gas industry, being 12 production sharing agreement (PSA) tenders in June 2019. and 17 online licence auctions.

PSA tenders offer a good opportunity for upstream investors to obtain a 50-year PSA that will enjoy all key industry-standard provisions and benefits: legislative stabilility, tax freeze, international arbitration for foreign investor PSAs, and other special regulatory and tax regime.

Unlike PSA tenders (where several criteria will be evaluated to determine the winner), online auctions for oil and gas licences will be held online and qualified participants will have an opportunity to bid; the highest bidder will win the auction.

The event was conducted as a live discussion, divided into two parts. The first concentrated on Production Sharing Agreements; Dmytro Fedoruk, partner and head of the Energy practice of Redcliffe Partners, acted as a moderator. In this session, panelists discussed what made Ukrainian PSAs attractive for investors, how companies can prepare their tender bids in the best possible way, how these bids will be evaluated, and what to expect from the PSA negotiation process.

The second part of the discussion focused on online licensing auctions, and was moderated by Albert Sych, Partner, and Law leader for Ukraine at EY. The participants discussed the process of companies’ participating in online auctions and the probable bidding rules. In addition, recent regulatory changes – key reforms that were recently implemented in Ukraine’s E&P market, and measures to unlock the promising potential of natural gas production – were also deliberated.

The expert panel also included Oleg Kyrylyuk, Acting Head of the State Geology Service of Ukraine, Roman Opimakh, Executive Director of the Association of Gas Producers of Ukraine, and Charles Valceschini, Founder of Valceschini & Associates, TechNefteGaz Consulting.

Albert Sych has shared his perspective on the 2019 licensing rounds: “With the oil & gas sector amongst our core practices, we are very pleased to see this increased activity in the market. The regulator’s new approaches are most welcome and should stimulate investors and contribute to the energy security of Ukraine. Having unique experience in Ukrainian PSAs, we are particularly interested to see Ukraine finally bring these projects to successful fruition.”