Ukraine Signs PSA with Eni, EDF on Black Sea Production

November 28, 2013

Ukraine signed a production sharing agreement (PSA) with Italy’s Eni and France’s Electricite de France on November 27, Itar-Tass has reported, citing the press service of the country’s Ministry of Energy and Coal Industry.

Energy Minister Eduard Stavitsky, who signed the document from the Ukrainian side, said that the investment volume under the project could exceed $4 billion.

The agreement provides for the production of hydrocarbons (mainly oil) on the Black Sea offshore fields Subbotino, Abikha, Mayachnaya and Kavkazskaya. Their total area is 2,000 square meters and the depth at seabed does not exceed 100 meters.

“The annual oil production under the basic scenario will reach two million tonnes, and according to an optimistic scenario - three million tonnes,” the minister said.

At the first stage, the investment volume should reach some $350 million. At this stage it is planned to conduct a 3D seismic survey of the fields and drill four wells.

According to the PSA, investors will take 75% of the produced resources, and the state — 25%.

“This project provides for an additional fee that the state will receive in the form of a production bonus, which will amount to $2.2 per barrel of oil or oil condensate, and $1.1 per barrel of oil equivalent per one thousand cubic meters of gas,” the minister said.

Copyright: Itar-Tass, 2013