Ukraine Upstream Fiscal and Regulatory Report - Volatile Shifts in Subsoil Rates Dent Investor Confidence


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Ukraine Upstream Fiscal and Regulatory Report - Volatile Shifts in Subsoil Rates Dent Investor Confidence

Summary

Ukraine Upstream Fiscal and Regulatory Report - Volatile Shifts in Subsoil Rates Dent Investor Confidence, presents the essential information relating to the terms which govern investment into Ukraines upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the states take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Ukraines upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in Ukraine
- Assessment of the current fiscal regimes state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in Ukraine

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to Ukraines upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the countrys upstream sector
- Utilize considered insight on future trends to inform decision-making
1 Table of Contents
1 Table of Contents 1
1.1 List of Tables 2
1.2 List of Figures 2
2 Regime Overview 3
3 State Take Assessment 6
4 Key Fiscal Terms - Royalty/Tax 7
4.1 Subsoil Use Fees (2013 onwards) 7
4.1.1 Commodity Valuation 7
4.1.2 Rates 7
4.1.3 Adjustment Coefficient 7
4.1.4 Reduced Rate (Only for Companies with at Least 25% State Ownership) 8
4.2 Pre-2013 Regime 8
4.2.1 Rental (Royalty) (Abolished December 31, 2012) 8
4.2.2 Subsoil Tax 11
4.2.3 Geological Tax (Abolished December 31, 2010) 11
4.3 Gas Export Duty 12
4.4 Direct Taxation 12
4.4.1 Corporate Income Tax 12
4.4.2 Deductions and Depreciation 12
4.4.3 Withholding Tax 14
4.5 Indirect Taxation 14
4.5.1 Value-Added Tax 14
4.5.2 Unified Social Contribution 14
5 Key Fiscal Terms - Production Sharing Agreement 15
5.1 Upfront Payments 15
5.1.1 Bonuses and Fees 15
5.1.2 Subsoil Use Fees 15
5.2 Cost Recovery 15
5.2.1 Limit on Recovery 15
5.2.2 Recoverable Costs 15
5.3 Profit-Sharing 16
5.3.1 Export Duty 16
5.4 Direct Taxation 16
5.4.1 Corporate Income Tax 16
5.4.2 Fiscal Stability 16
5.5 Indirect Taxation 16
5.5.1 Value-Added Tax 16
5.6 State Participation 17
6 Regulation and Licensing 17
6.1 Legal Framework 17
6.1.1 Governing Law 17
6.1.2 Contract Type 17
6.1.3 Title to Hydrocarbons 17
6.2 Institutional Framework 18
6.2.1 Licensing Authority 18
6.2.2 Regulatory Agency 18
6.2.3 National Oil Company 19
6.3 Licensing Process 19
6.3.1 Auctions 20
6.3.2 Direct Award 20
6.3.3 Tender 21
6.3.4 Bidding 21
6.4 License Terms 21
6.4.1 Duration 21
6.4.2 Work Obligations 22
6.4.3 Domestic Market Obligations 22
6.4.4 Local Content 22
7 Outlook 23
8 Contact Information 24

1.1 List of Tables
Table 1: Summary 3
Table 2: Ukraine, Subsoil Use Fee Rates (%), 2013 - 2017 7
Table 3: Ukraine, Crude Oil Rental Rates, 2001-2012 9
Table 4: Ukraine, Condensate Rental Rates, 2001-2012 9
Table 5: Ukraine, Gas Rental Rates, 2001-2012 10
Table 6: Ukraine, Subsoil Tax, Oil, Condensate and Gas 2001-2012 11
Table 7: Ukraine, Geological Tax Rates, 1999-2012 12
Table 8: Ukraine, Corporate Income Tax, 1991-2016 12
Table 9: Ukraine, Minimum Useful Lives (years), Fixed and Non-Current Assets (other than wells), 2015 Onwards 13
Table 10: Ukraine, Pre-2015 Development Well Depreciation Schedule 13
Table 11: Ukraine, Bonuses and Fees, Yuzivska PSA (2013) 15
Table 12: Ukraine, Profit-Sharing (%), Yuzivska PSA (2013) 16
Table 13: Ukraine, State Profit Share (%), Oleska PSA (2013) 16
Table 14: Ukraine, Special Permit Bidding Increments, 2016 20
Table 15: Ukraine, Special Permit Maximum Duration (years), 2016 21

1.2 List of Figures
Figure 1: Regime Flow Chart - Royalty/Tax 4
Figure 2: Regime Flow Chart - Production Sharing Agreement 5
Figure 3: Ukraine, Indicative NPV10/boe, IRR and State Take Comparison - Internal, 2016 6
Figure 4: Ukraine, Indicative NPV10/boe, IRR and State Take Comparison - Regional, 2016 6
Figure 5: Ukraine, Legal Framework 17
Figure 6: Ukraine, Institutional Framework 18