On June 22, Andrew Favorov, Director for Integrated Gas Business Division of Naftogaz of Ukraine, presented an updated strategy for hydrocarbon exploration and production and informed the industry experts and media representatives about the results of production at depleted fields.
Considering the global changes in the international gas market, namely the fall in gas prices inglobal markets by over 50% and the increase in supply of liquefied natural gas (LNG) to Europe from other parts of the world, the world’s largest gas companies adapt their business strategies. The Ukrainian Naftogaz Group follows their practice. Moreover, Ukrgasvydobuvannya has repeatedly stated that 75% of its fields are depleted by more than 87% and a rapid decrease of basic production volume is registered. Ukrgasvydobuvannya makes considerable efforts to compensate for the natural decline, but it is necessary to obtain a sufficient number of new special permits in order to achieve a significant increase in production.
Taking into account the new market conditions, the updated production plan provides for:
- - Focusing on maintaining basic production volume, developing existing infrastructure and performing works in the most efficient wells;
- - Limiting the drilling to the best candidate wells only, where return on investment is guaranteed;
- - Implementing digitalization at the fields and updating IT infrastructure of the production system to minimize costs;
- - Increase in production of liquid hydrocarbons due to favourable market situation;
- - Involving the world’s leading industry companies into cooperation in our depleted, unconventional or large fields, as well as for obtaining new knowledge: production enhancement contracts (PEC), production sharing agreements (PSA).
As Andrew Favorov noted, UGV focuses on economically profitable production projects that will make it possible to increase commercial gas volume and increase monetary capital in order to finance investment projects. The Company has achieved significant results due to equipment upgrade, implementation of production stimulation operations, modernization of surface facilities and purchase of new drilling rigs. The next step in improving the Company’s operating efficiency is to use international practice and improve personnel competencies.
It is worth mentioning that all transformation processes in the Company are primarily aimed at developing the principles of production in accordance with the international standards and establishing a high level of compliance with occupational safety, health and environment standards.
During the event, Andrew Favorov also provided explanations regarding the implementation of the capital expenditure plan in the amount of UAH 40 billion during 2016-2018, about 60% of which was spent on drilling and 30% on upgrading obsolete facilities and developing competencies. Such investments resulted in an increase in commercial gas volume by 1 billion cubic meters compared to 2015.
The issue of production and technological losses (PTL) caused lively discussion. It was noted that blowing of wells constituted the bulk of the losses. . Its volumes increased in 2018 after upward revision of standards regulating the number and average period of blowing a well. When developing the updated strategy in 2019, these standards have been revised downwards.