Business news from Ukraine


16 December , 2019  

JSC Ukrgazvydobuvannia (UGV) in 2020 will drill 80 new wells, Head of Naftogaz integrated gas business unit Andriy Favorov has said. “In 2020, we will drill and launch about 80 new wells. Earlier, to do this without modern drills, the drilling speed of which is two or three times higher than our old drills, was difficult,” he said in an exclusive interview with Interfax-Ukraine.
According to him, the company has changed its approach in this direction, and now it will not drill wells which drilling costs are disproportionate to the investments spent.
Naftogaz is not a charitable organization created to drill as many wells as possible… When we sit down and consider the economic return on our investments, we must be sure that it will be positive. Therefore, the wells that were planned to be drilled in order to increase production “by any possible amount” and their costs at a gas price of $200 per 1,000 cubic meters turned out to be unfounded. Yes, we cut them off. Yes, I will not drill them,” he said.
Favorov also said that on the basis of the analysis, of the existing 3,500 wells in the UGV portfolio, about 1,000 are already at zero production. “They need to be closed and written off, which is what we will do next year. We analyzed another 2,500 and, unfortunately, the most low-risk and most debit works have already been carried out on them in 2015-2016: hydraulic fracturing, coiled tubing, repairs… This lemon is squeezed, plus or minus this story is closed, and we need to move on to the next stage of technically more complex decisions,” Favorov said.
In this regard, the company analyzes deep-hole drilling and development projects for unconventional and offshore gas, to which it is planned to attract international companies with relevant experience. In particular, already in 2020, the UGV plans to drill two exploration wells at the Sviatohirsk field with tight gas reserves.
“We conducted a seismic survey, planned two exploration wells for next year to test our hypotheses. We will not invest billions in drilling without learning the small things, this is stupid. I will not go into details, but in the first half of the year we will test a sufficient number of our hypotheses to be sure that these and other unconventional deposits are economically efficient,” Favorov said.
He also called on the government to actively promote offshore mining.
“We have a great undisclosed potential for the shelf. The UGV has shelf licenses, some are disputed in courts and we have limited work opportunities. If the government is set to increase production, then discussion around the shelf must be mandatory. Unconventional gas, deep drilling and the shelf is a potential, and it must be converted into production,” he said.