Ukraine considers PSA with ENI and EDF to develop Black Sea oil and gas fields

Dragon Capital comments on the news: The news is somewhat surprising as similar licenses were previously offered at open auctions. One of the four fields in question, Subbotino, is currently being developed by Chornomornaftogaz, a subsidiary of Naftogaz Ukrainy, while the other three do not have proven reserves. Chornomornaftogaz boosted gas production in 9M13 by 38% y-o-y to 1.1 bcm.

The news is another medium-term positive for Ukraine’s gas production prospects, as production from the aforementioned shallow water fields can be launched more rapidly than from two other Black Sea fields, Prykerchenska and Skifska, auctioned before. Still it is too early to meaningfully estimate expected production volumes.