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Dixi Group President: the terms of PSAs with the winners must be made public

18 November 2019

The terms of extraction operations, rights and obligations of the parties must be made public

The Ministry of Energy and Environmental Protection of Ukraine must disclose information regarding essential provisions of extraction agreements, which also include production sharing agreements, Dixi Group President Olena Pavlenko said.

“As soon as production sharing agreements between the government and tender winning companies are signed, the essential provisions of these agreements must be made public,” Mrs. Pavlenko stressed.

The expert pointed out that this requirement is stipulated in the Extractive Industries Transparency Law.

In particular, the following information must be disclosed after production sharing agreements are signed:

- agreement title, number and date, the names of the parties;

- effective date and expiration date of the agreement;

- subject of the agreement;

- rights and obligations of the parties as regards extractive operations, other rights to natural resources;

- legislation unchangeability guarantees (if applicable);

- payment procedures;

- operational commitments, in particular, work programs;

- environmental protection obligations;

- work safety and accident prevention requirements concerning hired personnel and outside contractors and their hired personnel;

- social commitments, including participation in development of local infrastructure and the use of goods, works and services supplied, performed or provided by businesses domiciled within the territorial community where extractive operations take place, and requirements concerning organization of public hearings.

The law requires companies to submit this information to the Ministry of Energy and Environmental Protection, which in turn, has one month after receiving the relevant documents to officially publish this information.

It is worth reminding that the government announced PSA tenders for nine sites: Balakliiska, Berestianska, Buzivska, Varvynska, Zinkivska, Ivanivska, Rusanivska, Sofiivska and Uhnivska sites.

The tenders attracted 14 bidders, including joint consortiums of Ukrainian and foreign companies.

The Interagency Commission under the Ministry of Energy and Coal Industry named the winners: Well Co LLC for Uhnivska site; Oil & Gas Overseas Trading B.V. and Naftogazekspluatatsiia LLC for Zinkivska site; Ukrainian Energy LLC for Varvynska site; Geo Allianсе Partnership LLC and Geo Allianсе Partnership B.V. for Sofiivska site; Ukrgazvydobuvannia JSC for Buzivska site; Ukrnaftoburinnia Extractive Company PrJSC for Rusanivska site; Ukrgazvydobuvannia JSC for Berestianska site; Ukrgazvydobuvannia JSC and Vermilion Ukraine Exploration B.V. for Balakliiska site; Ukrgazvydobuvannia JSC and Vermilion Ukraine Exploration B.V. for Ivanivska site.

In July, the Cabinet of Ministers of Ukraine upheld the proposal from the Interagency Commission under the Ministry of Energy and Coal Industry to sign production sharing agreements (PSAs) with the tender’s winners.

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