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Ukraine Upstream Fiscal and Regulatory Report 2019 - Improved Fiscal Terms but Possible Political Risks - ResearchAndMarkets.com

May 31, 2019

DUBLIN--(BUSINESS WIRE)--May 31, 2019--

The “Ukraine Upstream Fiscal and Regulatory Report - Improved Fiscal Terms but Possible Political Risks” report has been added to ResearchAndMarkets.com’s offering.

“Ukraine Upstream Fiscal and Regulatory Report - Improved Fiscal Terms but Possible Political Risks”, presents the essential information relating to the terms which govern investment into Ukraine’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Ukraine’s upstream oil and gas investment climate.

Ukraine is organizing a series of licensing rounds for 2019 with the goal of increasing its gas production, but the political risks linked to the imminent presidential elections raise the possibility of further fiscal and regulatory changes and may reduce the attractiveness for international oil companies.

Based on analysis of Ukraine’s 2019 three online concession tenders and PSA tender, through which the country is offering in total 42 onshore blocks (20,000 sq. km). The first online concession tender was concluded on March 6 with the assignment of three blocks to Neftegazopromyshlennaya Geology LLC (Burisma Group), DTEK Naftogaz, and Ukrgazdobycha.

As a result of low natural gas royalty rates, fixed at 12% and 6% for new gas wells at reservoir depth of less than and more than 5,000 meters respectively, Ukraine’s gas fiscal framework is competitive at a regional level. However, no international oil company is among the winners of the first concession tender at a time when Ukraine needs capital and technology to develop its hydrocarbons sector.

Ukraine has modified its petroleum fiscal framework several times over the last 10 years and that, as a result of economic and political reasons, it is possible that it may change again in the coming years. The current government has promised that the existing royalty structure will be stable until 2023, but the March 2019 presidential elections add risk. President Petro Poroshenko, who has pursued an investor-friendly approach to the hydrocarbons sector, faces strong competition from former Prime Minister Yulia Tymoshenko and the anti-elite presidential candidate, comedian Volodymyr Zelensky.

Election polls suggest that no candidate will win the presidency on the first ballot and the overall result remains difficult to predict. The continuity of policy in the oil and gas sector is, therefore, far from clear as it is uncertain whether the next president will implement a liberalization agenda as suggested by the International Monetary Fund or introduce a populist agenda centered on reducing utility prices for households and increasing public spending.

Scope

Reasons to Buy

Key Topics Covered:

1 Table of Contents

1.1. List of Tables

1.2. List of Figures

2. Regime Overview

3. State Take Assessment

4. Key Fiscal Terms - Royalty/Tax

4.1. Subsoil Use Fees (2013 onward)

4.1.1. Commodity Valuation (P)

4.1.2. Subsoil Use Fee Rates

4.1.3. Adjustment Coefficient (A))

4.1.4. Reduced Rate (Only for Companies With at Least 25% State Ownership)

4.2. Pre-2013 Regime

4.2.1. Rental (Royalty) (Abolished December 31, 2012)

4.2.2. Subsoil Tax

4.2.3. Geological Tax (Abolished December 31, 2010)

4.3. Gas Export Duty

4.4. Direct Taxation

4.4.1. Corporate Income Tax (CIT)

4.4.2. Deductions and Depreciation

4.4.3. Withholding Tax

4.5. Indirect Taxation

4.5.1. Value-Added Tax

4.5.2. Unified Social Contribution

5. Key Fiscal Terms - Production Sharing Agreements

5.1. Upfront Payments

5.1.1. Bonuses and Fees

5.1.2. Subsoil Use Fees

5.2. Cost Recovery

5.2.1. Limit on Recovery

5.2.2. Recoverable Costs

5.3. Profit-Sharing

5.3.1. Export Duty

5.4. Direct Taxation

5.4.1. Corporate Income Tax (CIT)

5.4.2. Fiscal Stability

5.5. Indirect Taxation

5.5.1. Value-Added Tax

5.5.2. Customs Duties

5.6. State Participation

6. Regulation and Licensing

6.1. Legal Framework

6.1.1. Governing Law

6.1.2. Contract Type

6.1.3. Title to Hydrocarbons

6.2. Institutional Framework

6.2.1. Licensing Authority

6.2.2. Regulatory Agency

6.2.3. National Oil Company

6.3. Licensing Process

6.3.1. Auctions for Special Permits

6.3.2. Direct Award of Special Permits

6.3.3. Award via PSA Tender

6.4. License Terms

6.4.1. Duration

6.4.2. Work Obligations

6.4.3. Domestic Market Obligations

6.4.4. Local Content

7. Outlook

8. Appendix

For more information about this report visit https://www.researchandmarkets.com/r/3biibv

View source version on businesswire.com:https://www.businesswire.com/news/home/20190531005392/en/

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Related Topics:Oil and Gas Exploration and Production

KEYWORD: UKRAINE EUROPE

INDUSTRY KEYWORD: ENERGY OIL/GAS

SOURCE: Research and Markets

Copyright Business Wire 2019.

PUB: 05/31/2019 10:21 AM/DISC: 05/31/2019 10:21 AM

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