Gas revolution? Prospects for increased gas production in Ukraine. OSW Commentary NUMBER 287 | 21.09.2018

Konończuk, Wojciech (2018) Gas revolution? Prospects for increased gas production in Ukraine. OSW Commentary NUMBER 287 | 21.09.2018. [Policy Paper]

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Abstract

For a number of months now the Ukrainian gas production sector has been undergoing a major overhaul to improve the conditions in which it operates, with a view to significantly increasing production. The most important reforms include lowering tax rates and deregulation. These changes are a result of the government’s gas sector development plan for Ukraine, approved in 2016. Under this programme, the amount of gas extracted is to increase from the current 20 bcm to 27 bcm by as soon as 2020. Combined with greater energy efficiency, this would enable Ukraine to become self-sufficient in terms of its gas supply, and even to export gas in subsequent years. Because Ukraine has traditionally been dependent upon imports, and due to the political importance of gas-related issues, this course of events would be strategically important and have implications for energy relations in the entire region. Government forecasts showing an increase in gas extraction in such a short time may not be very realistic, but it does seem likely that in the next few years production could reach a level rendering Ukraine independent of imports. Ukraine has large gas reserves of hitherto untapped potential (the third largest in Europe). Meanwhile, this development can only occur if reforms within the mining sector, a reduction in corruption, an influx of foreign investment, and political stability are all in place.

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