Ukraine, a country of about 48 million people strategically located between Russia and Europe, lies in close proximity to the markets of Central and Western Europe and the Middle East. The Ukrainian Republic was the most important economic entity of the Former Soviet Union after Russia, producing about four times the output of the next-ranking republic. The country's vast agricultural potential, its highly educated population, its transportation networks and the technological infrastructure it inherited from the Soviet Union provide Ukraine with excellent pre-conditions for strong economic growth. Since gaining independence in 1991, Ukraine has been transitioning from a highly controlled centralized political system with an institutional framework of central state planning to a more decentralized, democratic form of government with more diverse institutions associated with a market economy.
Ukraine's energy sector is one of the most critical components of the country's economy. The sector has been plagued by a lack of domestic energy sources, increasing foreign debt, outdated and inefficient equipment, lack of funds, fuel shortages, barter deals, and non-payment by consumers. However in recent years Ukraine has made progress by pressing ahead with energy reforms, increasing cash collection rates and the promotion of privatization efforts.
In turn, the oil and gas industry is now beginning to stabilize after years of decline. According to Ukraine's 'National Program for Oil & Gas to 2010', developments are planned in the following key areas: increased geophysical research and exploration drilling, increased development drilling, and stabilization and gradual increase of oil, gas and condensate production. These areas provide significant opportunities for foreign investment, particularly exploration/production, and the supply of advanced technologies, products and services to facilitate increased production (e.g. horizontal drilling, reservoir management, work-over services, completion services).
Ukraine is blessed with a wealth of natural resources, substantial domestic production potential, and one of the largest oil and gas pipeline infrastructures in the world. Due to its strategic location between oil and gas suppliers in Russia, Central Asia and the Caspian Basin and consumers in Europe, Ukraine is also a key transport country.
The Dnieper Donets Basin is the principle hydrocarbon producing basin of the Ukraine. Gas was first discovered in 1950 and although the basin is in the declining stage of production, the exploration potential has not been exhausted. The Ukraine has an estimated 395 million barrels of proven oil reserves, the majority of which are located in the eastern Dnieper-Donetsk basin. Although Ukraine has made efforts at exploration, particularly in its sector of the Sea of Azov, oil production has remained relatively flat since independence. According to the 2008 BP Statistical Energy Survey, Ukraine consumed an average of 324,000 barrels a day of oil in 2007.
Ukraine's geographic location makes it an important corridor for oil and natural gas to transit from Russia and the Caspian Sea region to Europe. During 2006, Ukraine pipelines carried 22 percent of Russia's exports to Ukraine refineries and Europe.
Ukraine had 2007 proved natural gas reserves of about 35 Tcf, with gas production in 2007 of 19 bcm and consumption of 64 bcm. As is the case with oil, Ukraine plays a significant role as an intermediary connecting Russia, the world's largest natural gas producer, with growing European markets. Ukraine's aging natural gas infrastructure is of concern both to European consumers and Russian producers.
The 2010 development program includes two development wells and upgrades to the BC gas plant and the exploration work program includes reprocessing and interpretation of 3D seismic data in the Dubrivska field.
Rudia License Group (4 Blocks: B, C, NY, DB)
The Rudis Licence Group in the Ukraine which is controlled 100% by KEC will be studied for its unconventional hydrocarbon potential. KEC’s assets under study consist of three gas, condensate and oil fields in the Dnieper-Donets basin: Bilousivska – Chornukhynska fields (BC), North Yablunivska field (NY) and the Dubrivska field. The Dubrivska Block has two exploratory wells which have proven presence of oil, condensate and gas.