On the Way to Energy self-reliance

20 November 2018

Experience. A full working cycle enables the private gas producing company Burisma Group to supply the domestic gas pipe with more than a billion cubic meters of blue fuel every year and to take part in creating the Energy Security of Ukraine.

In 2020, Ukraine intends to increase gas production to 27 billion cubic meters, said the Prime Minister of Ukraine Volodymyr Groysman at the International Mayors Summit in Kyiv. It provides an opportunity not only to cover the country’s gas needs, but also to create export conditions.

International experts (a research of the BP Statistical Review of World Energy 2018) have sided with the government, saying that with the existing gas production rate, resources will be available for another 54 years. The problem is not only that Ukraine owns explored gas reserves of more than 920 billion cubic meters, but uses only 2% per year —  said the Vice Prime Minister of Ukraine Volodymyr Kistion,.

For the largest country in Europe, which has 5% of the world’s mineral and raw material reserves (we have explored 20 thousand deposits and 111 minerals from 120 used by humanity), this rate is not high enough.

Destroying a Negative Trend

Domestic gas producers that are members of the Association of Gas Producers of Ukraine (AGPU) are trying to make do with the abovementioned circumstances.

“Thanks to an effective dialogue with the authorities, we have achieved most favorable conditions for the development of the gas producing industry,” said the Chairman of the Board of the Association, Advisor to the Board of Directors and Director for International Cooperation and Strategic Development at Burisma Group Vadym Pozharskyi. Together with the government and relevant committee of the Verkhovna Rada we have prepared several important drafts that significantly improved the work of gas producers.

First of all, it reduces a lengthy list of permission documentation to develop gas fields, which will allow to ramp up investment. Secondly, it was also decided to decentralize rents. The funds obtained in the amount of 5% are transferred to local budgets.

As a result, local authorities have a chance to invest in social projects, as well as receive financial resources to help communities grow.

Production rated are to be gradually reduced until 2023: from 29% to 12% for wells with a depth of 5,000 meters and from 14% to 6% for wells with a depth of more than 5,000 meters. It means that by the end of 2018, which will go down in the country’s history as a year of positive state regulation in the gas industry, the production of «blue fuel» can grow to almost 22 billion cubic meters.

Like-minded Association

There is interesting statistics: 95% of blue fuel in Ukraine is produced by enterprises of state and private ownership that serve on the Association of Gas Producers of Ukraine. The state-owned company PJSC “Ukrgasdobycha” is a leader in terms of volume. Without a doubt, the state-owned company is indispensable without private enterprises, which also ensure Ukraine’s energy independence. Burisma Group, the largest private natural gas producer in Ukraine, has been operating on the market since 2002. Independent gas companies produce now more than 20% of Ukrainian blue fuel. The fifth part is produced by Burisma Group.

“Recently, at our request DeGolyer & MacNaughton Corp. a reputable international company, has calculated the amount of gas reserves as per our licenses,” said Vadym Pozharskyi.  Taking into account the current volumes and gas production rates (over a billion cubic meters per year), we will have more than 100 years of production. We plan to double gas production over the coming years.

 THE UK PROFILE

Vadym Pozharskyi was born on January 26, 1979. In 1999, he graduated from the University of East Anglia (Norwich, UK) with a Bachelor of Laws, and in 2000 Mr. Pozharskyi obtained a Master’s degree in European law from the Leiden University (Leiden, the Netherlands). He has significant experience in the public and private sectors. While working in government, he worked closelywith international organizations, in particular the UN agencies. Since April 2014, he has held the position of Director for International Cooperation and Strategic Development, as well as the position of Advisor to the Board of Directors at Burisma Group. Mr. Pozharskyi manages the issues concerning strategy and cooperation with international organizations, government and public relations. In March 2018, Mr. Pozharskyi was elected as the Chairman of the Board of the Association of Gas Producers of Ukraine — the largest industry association of domestic gas companies.

Burisma Group owns the largest fracking and gas recovery fleet, and also brings best industry professionals together.

New Technologies — New Fields

Ukraine has abundant gas reserves. Its deposits are concentrated in three basins: the Dnieper-Donets, Carpathian and Black Sea-Crimea. Burisma Group operates in the Carpathian and Dnieper-Donets oil and gas basins. Group companies are located in Kharkiv, Poltava, Dniepr, Ivano-Frankivsk, Lviv and Chernivtsi regions. Although, the company achieved such brilliant successes not because of the uniqueness of the deposits (after all, they practically have no difference from others), but thanks to the organization of the so-called complete production cycle: the company’s specialists conduct their own geological exploration, seismic exploration, drilling, production and sale of hydrocarbons, well repair, construction of gas delivery stations and pipelines. The experience of Burisma Group allows to provide services to other companies interested in drilling wells or carrying out maintenance work at the facilities.

“By the way, Burisma Group is almost the only private natural gas company that discovers new fields,” proudly said Vadym Pozharskyi. “We spend huge amount of money and reinvest our profits into fundamental research that has not actually been carried out in Ukraine since Soviet times. Mr. Pozharskyi gives an example: thanks to new technologies, Burisma Group conducted successful exploration and drilling operations at the Zhuravlyna area of the Derkachivsko-Voitenivskyi block in Kharkiv region, opening here the productive horizon C-4, which has great potential, but previously none of the companies worked with it because of the lack of technology. Seismic exploration work here was carried out with the help of modern equipment together with leading foreign experts.

In Search of Equipment

Foreign experts have repeatedly asked Mr. Pozharskyi the question whether internal competition does not affect the activities of Burisma Group.

«I always answer that there is no gas competition in Ukraine. The structure of our Association includes eight companies, and everyone is happy about the success of colleagues who discover new deposits. At the same time, we all have to compete with difficult geological conditions, because the deposits of Ukrainian gas are at considerable depths and require high-tech foreign equipment for production. We were the first who imported American drilling machines to Ukraine, and unfortunately, on the domestic market we are one of the few. These two machines are the largest, not only in Ukraine, but also in Central and Eastern Europe. We have already begun to exploit them. Their cost is over tens of millions dollars, but its power makes it possible to quickly and accurately drill wells up to 10,000 meters in depth. We can assume that, technically Burisma Group is before other natural gas companies: it has 20 drilling machines of various types and capacities, and the company also provides services to other enterprises. In addition, the Group owns the most modern and large fleet of seismic exploration equipment and equipment for hydraulic fracturing. Burisma Group employs highly qualified geologists, seismologists and engineers. There are no problems with personnel here: students of relevant Ukrainian universities want to undertake an internship right here, in a place where all the conditions for the full development of young specialists are created.

All employees are provided with guaranteed medical insurance. Even the food at the drilling facilities is the best among other gas producing enterprises: Americans who work here and train their colleagues cannot tear themselves away from the Ukrainian national dishes.

New Well Life

In terms of gas production, Burisma Group occupies a worthy place among industry leaders: in 2010, the company produced 100 million cubic meters of blue fuel per year, then in 2018 this figure is already over a billion cubic meters. Luckily, Burisma Group does not stop at what has been accomplished: by the end of the next year, the company plans to drill more than 20 new wells. Due to the additional technological operations, the company takes care of the old wells extension that have been depleted during operation. Burisma Group owns unique technologies and specialized machinery for well stimulation. As a result, it is possible to obtain extra product from the formations that were previously considered as depleted, or to exploit new formations that were unprofitable.

Burisma Group uses equipment which is aimed to work in difficult geological conditions. For the most wells we use innovative controlled directional drilling methods.

“We are the first company in Ukraine, which has started producing hydrocarbons from two productive horizons located at different depths,” Vadym Pozharskyi notes the complexity of the technology called twin tubing. Every year the company invests more than 3 billion UAH in its own activities, while paying the taxes to the State budget in good faith and on time. Last year, Burisma Group won the third place among other private companies for this indicator.

For the three quarters of 2018, the company paid more than 3 billion UAH, or 1% of the State budget. By the end of the year, the amount of taxes paid will be more than 4 billion UAH.

Burisma Group at its own expense builds pipelines to the central gas pipeline to ensure gas supply for industrial consumers.

 

No faith – No Space

 

In conversation, we could not ignore the issue of investments that the Ukrainian gas sector needs so much.

“Unfortunately, not so many positive news come in abroad from Ukraine” said Vadym Pozharskyi. But European businessmen, arriving in Kiev see that the Ukrainian capital is on a level with such cities as Prague or Warsaw. I constantly emphasize that foreigners need to be told more about positive cases of companies operating in Ukraine. We must change our information field to a more positive one.

Companies such as Burisma Group demonstrate by their own example that foreigners should not be afraid to invest in Ukraine and cooperate with our business.

“An important advantage of our company, unlike other domestic enterprises, is that we are developing at our own expense investing them in the Ukrainian economy. We do not rely on loans”.

Since 2017, Burisma Group has been implementing the Strategy of Billions program, which provides billions of annual capital investments in gas production, as well as billions of UAH in taxes paid and billions of cubic meters of natural gas produced for Ukraine.

 

THE UK REFERENCE

 

Burisma Group includes the following companies: Energy Service Company ESCO-PIVNICH, KUB-GAZ, PARI, “Persha Ukrainska Gasonaftova LLC”, “SOE”, Nadragaz, Aldea Ukraine, Burisma Service, Tehnocom-service, Nadragazdobycha, Gazoilinvest and “NGPGEO”. It is the only vertically integrated holding in Ukraine that explores, extracts, provides services and sells hydrocarbons.

Burisma Group is among the three most independent gas producers and the largest taxpayers in Ukraine. According to the registry of the State Service of Geology and Mineral Resources of Ukraine, Burisma Group owns and develops 35 licenses for the extraction of hydrocarbons in the two main oil and gas basins of Ukraine — the Dnieper-Donets and the Carpathians. The market share of Burisma Group operating companies among Ukrainian gas producers is more than 20%. In March 2018, the Philanthropists’ Association of Ukraine and the Organizing Committee of the “Charitable Ukraine-2017” declared international energy group Burisma winner of the contest in the category “Big business’s charity” and awarded the company with a special prize “Angel of Goodness”.