Media: Ukrainian oil and gas companies avoid developing new deposits because of improper taxation

By 2018, two thirds of resourced subsoil area had received the necessary permits for geological survey and the companies holding those permits have had them for more than five years. 7,600 square kilometers of prime subsoil remain untapped because initial investment in permanent production would require added taxes,wrote Ihor Maskalevich it in his article for ZN.UA. According to him, it would be better for companies to produce oil and gas long term "as part of scientific study." It is a situation that has remained unchanged for many years.

In the beginning of 2016, according to the data of the State Geological Information Fund of Ukraine, there were 502 valid permits for geological surveys and oil and gas production. 108 of them were for geological survey of the subsoil, including pilot commercial development of deposits or “PCD.”

Another 94 permits were for geological survey of the subsoil, meaning PCD with subsequent oil and gas production. Another three hundred permits were for production. This meant that 82 of 108 special permits for geological survey were valid for more than five years; 46 were valid for more than ten years. In fact, five years is more than enough for a successful survey.

The State Service of Geology and Mineral Resources of Ukraine announced the following figures: "In 2015–2017 more than 70 of subsoil users who hold 158 special permits for use of oil and gas fields submitted zero indicators in the tax declarations on rent. 20 state enterprises and several private companies also submitted zero indicators regarding certain fields.”

The Service noted that, unfortunately, Ukrgazvydobuvannya (one of the three main producing subsidiaries of Naftogaz Ukrainy) and Ukrnafta were counted among them.

  Ukraine, Russia, Ukrnafta, Ukrgazvydobuvannya