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 supplies over the coming winters.
|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||242.9||220.6||223.9||230.1||238.8||248.0||258.3|
|Dry natural gas production, bcm||20.5||19.9||19.7||19.5||19.3||19.1||18.7|
|Dry natural gas consumption, bcm||42.6||33.8||30.8||29.9||29.5||29.2||28.9|
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 BV, 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. In addition, according to a November 2016 report, it seems the Ukrainian Cabinet of Ministers did not validate the development plan by Yuzgas, meaning any exploration activity is unlikely to be forthcoming in the coming quarters.
Ukraine is a small crude oil and condensates producer, and production is expected to decline over the forecast period on account of declining reserves and maturing fields.
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 struggling refining sector, crude net imports have fallen substantially over the past decade and are expected to remain low over the coming decade. This has also translated into increasing refined products import requirements, as domestic production of refined fuels is insufficient to meet demand. Net imports of refined products will pick up speed over the coming years as consumption recovers but refining utilisation rates remain low.
Despite large reserves, gas production in Ukraine is forecast 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.
2015 gas consumption is expected to have strongly contracted taking overall consumption down by 20% to 33.8bcm in 2015, down from a peak of 87.2bcm in 2005. As part of an extensive energy sector reform plan, gas prices have increased extensively over the past two years: Gas prices for households for example increased eleven times over two years, leading to extensive declines in overall consumption over 2015. 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.
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. Over the November 2015-November 2016 period, Naftogaz did not import any Russian gas.
The European Commission's decision to allow Gazprom more access to the OPAL pipeline will only marginally reduce gas transit through Ukraine as EU gas demand recovers and momentum behind the Nord Stream II project wanes.
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.
- 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.
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:
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- 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.
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.
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.
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 perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
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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.
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