Ukraine Oil & Gas Report

Providing expert analysis, independent forecasts and competitive intelligence on the oil and gas industry.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Oil & Gas Risk Reward Index, Market Summary, Economic Forecasts, Company Profiles, Competitive Landscape and Global and Regional Overview.

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Ukraine Oil & Gas Report
Product Price
$1,295.00

BMI View: A v olatile security situation and continuing geopolitical tensions hamper exploration and production activities in Ukraine. Regulatory challenges, ill ustrated by recent tax hikes on oil, gas and mineral extractio n , are expected to act as a further deterrent to investment in Ukraine's oil and gas sector . Despite Ukraine's significant gas supply diversification efforts, we expect the country will continue to depend to some extent on Russian gas su pplies over the coming winters.

Headline Forecasts (Ukraine 2014-2020)
2014 2015 2016f 2017f 2018f 2019f 2020f
f = BMI forecast. Source: EIA, BMI
Crude, NGPL & other liquids prod, 000b/d 60.0 58.8 56.9 54.6 52.4 50.3 48.3
Refined products production, 000b/d 116.3 115.2 114.0 112.9 111.8 110.6 109.5
Refined products consumption & ethanol, 000b/d 242.4 219.8 222.8 228.8 237.3 246.4 256.5
Dry natural gas production, bcm 20.1 19.7 19.5 19.3 19.1 18.9 18.5
Dry natural gas consumption, bcm 42.6 33.8 30.8 29.8 29.2 28.9 28.6
Brent, USD/bbl 99.50 53.60 46.50 57.00 62.00 65.00 71.00

Latest Updates And Key Forecasts :

  • We maintain our forecasts for oil and gas reserves this quarter. However, we note that Chevron and Shell's exits from their respective shale gas exploration projects create increasing downside risk to our gas reserves forecasts.

  • In July 2016, it was reported that a company called Yuzgas B V, set up by investment fund Emerstone Energy, won the contract for the Yuzivska PSA. However, a specific investment plan or planned investment sums were not cited.

  • Downside risk to oil production exists over the coming year from a tax dispute between Ukrnafta and the Ukrainian state. In March 2016 the company received a formal notification from the State Service of Geology & Mineral Resources of Ukraine that 16 of its licenses could be suspended, in addition to three recent suspensions. According to the company, the suspension of these licenses would stop production of about 6,500b/d of crude oil, a significant proportion of the company's production and of the country's total 38,000b/d crude and condensates production in 2016.

  • Most of Ukraine's refineries remain closed as of 2016, leading to a severe underutilisation of its refining capacity. We maintain this situation will endure until an amelioration in the political, economic and security situation comes through.

  • Given the country's disastrous refining sector, crude net imports have fallen substantially over the past decade and are expected to remain low over the coming decade. Nevertheless, this has also translated into increasing refined products import requirements, as domestic production is insufficient to meet demand. Net imports of refined products will pick up speed as consumption recovers. This is unlikely to change unless the refining sector undergoes a significant revamp.

  • Despite large reserves and an active exploration scene, gas production in Ukraine is forecast to shrink across our forecast period to 2025. Upstream activities will suffer from an unpredictable regulatory and fiscal environment, the legal uncertainties regarding offshore Crimean licenses and the ongoing security situation in the east of the country.

  • While the government has enacted legislation early 2016 to reduce subsoil taxes to the same levels that were in effect prior to the increase in 2014, the unpredictable environment is clearly not incentivising for companies wanting to explore and develop hydrocarbon projects in Ukraine.

  • Gas consumption for 2015 is believed to have strongly contracted taking overall consumption down to 33.8bcm in 2015, down from a peak of 87.2bcm in 2005. This quarter, we have adjusted our 2015 historical data based on recently available Naftogaz data. We maintain our forecast for continued, albeit weaker, contraction over the coming years on the back of increased gas prices and the government's gas efficiency plans.

  • In May 2016, Ukraine's new government overhauled household heating prices to help restart a USD17.5bn loan from the International Monetary Fund as the U.S. The new gas tariff eliminates separate winter and summer prices for households, and unifies what they pay with the cost for industrial customers. It will be set at UAH6,879 (USD273) per 1,000 cubic meters starting May 1. As with the other price increases, we believe the introduction of the higher prices will weigh heavily on gas demand, as household incomes continue to be under severe stress.

  • Ukraine has successfully diversified its gas import sources and substantially reduced dependence on Russian gas over the past two years. In 2015, Naftogaz data highlighted that imports over 2015 from Russia decreased from 14.5bcm in 2014 to 6.1bcm in 2015, with Russian supplies in Ukraine's gas consumption decreasing from 34% in 2014 to 18% in 2015. In 2015, imports of gas from the European market more than doubled from 5.0bcm to 10.3bcm.

  • Naftogaz did not purchase any Russian gas in Q1 2016 because the price offered by the Russian side for this period was higher compared to gas prices at which Naftogaz purchased gas in the European market. Over this period, European consumers received nearly 27bcm of natural gas transported from Russia via Ukraine.

  • Rapidly falling domestic gas consumption will push Ukraine's gas imports lower until 2019. As the consumption stabilises and domestic production continues to shrink, we expect a slight recovery in the country's gas import levels in the second half of our forecast period. Despite strong reductions in Russian gas imports, Ukraine will remain dependent on Russian gas during the winter months over the short to medium term.

BMI Industry View
7
Table: Headline Forecasts (Ukraine 2014-2020)
7
SWOT
9
Oil & Gas SWOT
9
Industry Forecast
11
Upstream Exploration
11
Latest Updates
11
Structural Trends
11
Upstream Projects
14
Table: Key Upstream Projects In Ukraine
14
Upstream Production - Oil
15
Latest Updates
15
Structural Trends
15
Table: Oil Production (Ukraine 2014-2019)
17
Table: Oil Production (Ukraine 2020-2025)
17
Upstream Production - Gas
18
Latest Updates
18
Structural Trends
18
Table: Gas Production (Ukraine 2014-2019)
21
Table: Gas Production (Ukraine 2020-2025)
21
Refining
22
Latest Updates
22
Structural Trends
22
Table: Refining Capacity and Refined Products Production (Ukraine 2014-2019)
24
Table: Refining Capacity and Refined Products Production (Ukraine 2020-2025)
24
Refined Fuel Consumption
25
Latest Updates
25
Structural Trends
25
Table: Refined Products Consumption* (Ukraine 2014-2019)
27
Table: Refined Products Consumption* (Ukraine 2020-2025)
27
Gas Consumption
28
Latest Updates
28
Structural Trends
28
Table: Gas Consumption (Ukraine 2014-2019)
31
Table: Gas Consumption (Ukraine 2020-2025)
31
Trade - Oil
32
Crude Oil
32
Latest Updates
32
Structural Trends
32
Table: Crude Oil Net Exports (Ukraine 2014-2020)
34
Table: Crude Oil Net Exports (Ukraine 2020-2025)
34
Refined Fuels
34
Latest Updates
34
Structural Trends
34
Table: Refined Fuels Net Exports (Ukraine 2014-2019)
36
Table: Refined Fuels Net Exports (Ukraine 2020-2025)
36
Trade - Gas (Pipeline And LNG)
37
Latest Updates
37
Structural Trends
37
Table: Reverse Flow Gas Pipeline Connection Capacity From EU To Ukraine
40
Table: Gas Net Exports (Ukraine 2014-2019)
41
Table: Gas Net Exports (Ukraine 2020-2025)
41
Industry Risk Reward Ratings
42
Central And Eastern Europe Oil & Gas Risk/Reward Index
42
Table: CEE: High Risk, Low Reward
42
Table: CEE Upstream, Downstream And Overall Risk/Reward Index
43
Upstream: China Still The Target Market
43
Table: CEE Upstream Risk/Reward Index
45
Downstream: Turkish STAR Only Bright Spot In Weak Market
46
Table: CEE Downstream Risk/Reward Index
48
Ukraine - Risk/Reward Index
50
Market Overview
52
Ukraine Energy Market Overview
52
Regulatory Structure
52
Fiscal Regime
53
Table: Ukraine Fiscal Regime Terms
53
Licensing Regime
54
Table: Ukraine Licensing Regime
55
Oil And Gas Infrastructure
56
Oil Refineries
56
Table: Refineries In Ukraine
56
Oil Pipelines
57
LNG Terminals
58
Gas Storage
59
Gas Pipelines
59
Competitive Landscape
62
Competitive Landscape Summary
62
Table: Key Players - Ukraine Oil And Gas Sector
63
Table: Key Upstream Players
63
Table: Key Downstream Players
63
Company Profile
64
Naftogaz Ukrainy
64
Company Overview
64
Table: Key Financial Data (UAHmn)
65
Regional Overview
66
Central And Eastern Europe Oil & Gas Regional Overview
66
Oil Production: Oil Powerhouses Falter On Weak Prices
66
Oil Consumption: Short-Term Weakness As Russia Struggles
67
Refining Capacity: Modernisation Key To Competing
68
Natural Gas Production: Gas Ramp-Up Demand Dependent
69
Table: Central Asia-China Gas Pipeline Expansions
70
Gas Consumption: Demand Falters On Struggling Economies
71
Table: Central & Eastern Europe Oil & Gas Production & Consumption, Refining Capacity & Trade
72
Glossary
74
Table: Glossary Of Terms
74
Methodology
76
Industry Forecast Methodology
76
Source
78
Risk/Reward Index Methodology
78
Table: Bmi's Oil & Gas Upstream Risk/Reward Index
80
Table: Weighting
81

The Ukraine Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Ukraine including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Ukraine Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Ukrainian oil and gas industry.

Key Benefits

  • Benchmark BMI's independent oil and gas industry forecasts for Ukraine to test consensus views - a key input for successful budgeting and strategic business planning in the Ukrainian oil and gas market.
  • Target business opportunities and risks in the Ukrainian oil and gas sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Ukraine.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering oil and gas reserves, supply, demand and refining, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the upstream and downstream sectors and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast:

  • Pricing: Oil price (USD/bbl, WTI, Brent, OPEC basket, Urals); oil products prices (unleaded gasoline, gasoil/diesel, jet/kerosene – USD/bbl) at global hubs.
  • Production, Consumption, Capacity & Reserves: Proven oil reserves (bn barrels), production, consumption, refinery capacity and throughputs (‘000b/d); proven gas reserves (tcm), production and consumption (bcm) and fuels trade.
  • Imports & Exports: Crude oil exports/imports (‘000s b/d) and value of crude oil trade in USD. Fuels exports/imports (‘000s b/d) and value of fuels trade in USD. Natural gas imports/exports (bcm), by pipeline and/or LNG, and value of natural gas trade.

BMI’s Oil & Gas Risk Reward Index

BMI’s Risk Reward Indices provide investors (independents, NOCs, IOCs, oil services companies) looking for opportunities in the region with a clear country-comparative assessment of the upstream and downstream market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Market Overview

A profile of the upstream and downstream sectors, including analysis of reserves, output, consumption and trade of energy products; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.

Competitive landscape

Comparative company analyses by USD sales, % share of total sales, number of employees, year established, ownership structure, oil production (‘000b/d), gas production (bcm), downstream capacity (‘000b/d) and % market share.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Regional Overview

Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.

Global Oil Market & Oil Products Outlook

Based on our country coverage of over 99% of global oil and gas production and consumption, BMI provides demand, supply and price forecasts to end-2024 for oil, gas and oil products.

Sources

The Oil & gas Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.