Main deposits of oil and gas on Black Sea shelf

Black Sea deepwater natural gas is associated with high costs of exploration, significant investment in extraction and associated infrastructure. According to different estimations the general reserves here may constitute from 3 to 13 trillion cubic meters of natural gas and more than 1 trillion tonnes of oil with condensate.

World experience shows that the costs of extraction usually reach UAH 600-1000 per 1000 cubic meters. For the Ukrainian Black Sea deepwaters, the extraction could start already in 2022, following the positive exploration results. Possible investment for the annual extraction of 7-9 billion cubic meters of natural gas may constitute UAH 80-90 billion.

Currently there are the following five oil and gas areas in the deepwaters of Ukrainian part of the Black Sea:

Prikerchenska Area

General Area, in squire km12 960
Sea depth at the site, metersFrom 300 to more than 2000
Possible extraction rate, per annum4 million tonnes of oil and 4,5 billion cubic meters of natural gas
Foreseen InvestmentUSD 1 billion during the first eight years of activities, including minimum USD 330 million in the first three years. If the reserves and industrial extraction are confirmed, additional investment may exceed USD 15 billion.

Production Sharing Agreement on Prykerchenska Area has been signed by the Cabinet of Ministers of Ukraine and Vanco International Ltd on October 19th, 2007. Later, Vanco International Ltd assigned its rights and obligations under the PSA toVanco Prykerchenska Ltd. On December 2nd, 2007  Vanco Prykerchenska Ltd received the Special Permit for the Reserves Use regarding Prykerchenska Site from the Ministry of Environment and Natural Resources of Ukraine.

Already in 2008, however, the same Ministry cancelled the Special Permit; it was restored by the Ministry only in February 2013, after a number of legal cases and negotiations.

Skifska Area

General Area, in squire km16000
Sea depth at the site, metersFrom 300 to more than 2000
Possible extraction rate, per annum10 billion cubic meters of natural gas
Evaluation of Reserves200-250 billion cubic meters of natural gas
Foreseen InvestmentUSD400 million in exploration and prospecting operations. If the reserves and industrial extraction are confirmed, the additional investment may constitute USD 10-12 billion.
Premium to the state budget of UkraineUSD 325 million after PSA signing

The consortium of Exxon Mobil Exploration and Production Ukraine BV (40%, the operator), Shell (35%), OMV – 15% (through its Romanian subsidiary Petrom), and NJSC Nadra Ukrayny (10%) has won the tender on signing the Production Sharing Agreement on Skifska Oil and Gas Area. The PSA signing is expected by the end of 2013.

Pallace Area

General Area, in squire km16000
Sea depth at the site, metersFrom 450 to 850
Possible extraction rate, per annum2-3 billion cubic meters of natural gas
Evaluation of Reserves250-485 billion cubic meters of natural gas
Foreseen Investmentn/a

The special permit for the reserves’ use to the Pallace Area is owned by NJSC Naftogas of Ukraine. In October 2012 the company has announced the tender on seismic exploration and creation of 3D maps of the site. The drilling of 15 exploration and 162 extraction wells with general depth of 5-6 km is expected at the later stages.

Foros Area

General Area, in squire km13615
Sea depth at the site, metersn/a
Possible extraction rate, per annum2-3 billion cubic meters of natural gas
Evaluation of Reservesn/a
Foreseen InvestmentUSD 8-10 billion

The tender of the right to sign the Production Sharing Agreement is expected by the end of 2013Black Sea deepwater natural gas is associated with high costs of exploration, significant investment in extraction and associated infrastructure. According to different estimations the general reserves here may constitute from 3 to 13 trillion cubic meters of natural gas and more than 1 trillion tonnes of oil with condensate.

World experience shows that the costs of extraction usually reach UAH 600-1000 per 1000 cubic meters. For the Ukrainian Black Sea deepwaters, the extraction could start already in 2022, following the positive exploration results. Possible investment for the annual extraction of 7-9 billion cubic meters of natural gas may constitute UAH 80-90 billion.

Currently there are the following five oil and gas areas in the deepwaters of Ukrainian part of the Black Sea:

Prikerchenska Area

General Area, in squire km12 960
Sea depth at the site, metersFrom 300 to more than 2000
Possible extraction rate, per annum4 million tonnes of oil and 4,5 billion cubic meters of natural gas
Foreseen InvestmentUSD 1 billion during the first eight years of activities, including minimum USD 330 million in the first three years. If the reserves and industrial extraction are confirmed, additional investment may exceed USD 15 billion.

Production Sharing Agreement on Prykerchenska Area has been signed by the Cabinet of Ministers of Ukraine and Vanco International Ltd on October 19th, 2007. Later, Vanco International Ltd assigned its rights and obligations under the PSA toVanco Prykerchenska Ltd. On December 2nd, 2007  Vanco Prykerchenska Ltd received the Special Permit for the Reserves Use regarding Prykerchenska Site from the Ministry of Environment and Natural Resources of Ukraine.

Already in 2008, however, the same Ministry cancelled the Special Permit; it was restored by the Ministry only in February 2013, after a number of legal cases and negotiations.

Skifska Area

General Area, in squire km16000
Sea depth at the site, metersFrom 300 to more than 2000
Possible extraction rate, per annum10 billion cubic meters of natural gas
Evaluation of Reserves200-250 billion cubic meters of natural gas
Foreseen InvestmentUSD400 million in exploration and prospecting operations. If the reserves and industrial extraction are confirmed, the additional investment may constitute USD 10-12 billion.
Premium to the state budget of UkraineUSD 325 million after PSA signing

The consortium of Exxon Mobil Exploration and Production Ukraine BV (40%, the operator), Shell (35%), OMV – 15% (through its Romanian subsidiary Petrom), and NJSC Nadra Ukrayny (10%) has won the tender on signing the Production Sharing Agreement on Skifska Oil and Gas Area. The PSA signing is expected by the end of 2013.

Pallace Area

General Area, in squire km16000
Sea depth at the site, metersFrom 450 to 850
Possible extraction rate, per annum2-3 billion cubic meters of natural gas
Evaluation of Reserves250-485 billion cubic meters of natural gas
Foreseen Investmentn/a

The special permit for the reserves’ use to the Pallace Area is owned by NJSC Naftogas of Ukraine. In October 2012 the company has announced the tender on seismic exploration and creation of 3D maps of the site. The drilling of 15 exploration and 162 extraction wells with general depth of 5-6 km is expected at the later stages.

Foros Area

General Area, in squire km13615
Sea depth at the site, metersn/a
Possible extraction rate, per annum2-3 billion cubic meters of natural gas
Evaluation of Reservesn/a
Foreseen InvestmentUSD 8-10 billion

The tender of the right to sign the Production Sharing Agreement is expected by the end of 2013