Ukraine is cheering greater than expected success with an exploration well drilled in the west of the country.

State-owned gas producer Ukrgazvydobuvannya drilled the well in the country’s legacy Carpathian play, where first gas was produced a century ago, and was part of programme to explore for more resources near an existing mature field.

The well was one of the few drilled since Russia’s invasion of Ukraine early last year, with privately held oil and gas companies also continuing to face government restrictions on production and investments.

Ukrgazvydobuvannya said the well was drilled to a depth of 1600 metres by the company’s wholly-owned drilling contractor Ukrburgaz, and flowed at a rate of 200,000 cubic metres per day of gas, the strongest result in the area in the past 20 years.

“The result of this well and exploration efforts in mature areas demonstrate the effectiveness of using modern technologies and new approaches to data interpretation,” Ukrgazvydobuvannya executive director Oleg Tolmachev said.

He added that there is “great potential for discovering new hydrocarbon fields” in Ukraine’s western region, as shown by the results of similar programmes in neighbouring countries, such as Poland.

The company added that the well location was defined following re-interpretation of previously collected 3D seismic and Ukrgazvydobuvannya is now “working to assess reserves of the discovery and to expand the company’s technological capabilities” to increase the well’s productivity.

Earlier in November, Ukrgazvydobuvannya said it had commissioned two wells — one at a recent discovery and another at a legacy field, reportedly in the country’s northeast, which flowed at a combined total rate of 500,000 cubic metres per day of gas.

Ukrgazvydobuvannya is a subsidiary of Ukraine’s state-run oil and gas company Naftogaz Ukrainy, which has almost gained monopoly status for gas distribution in the country, having taken control of privately held regional networks following the Russian invasion.

Naftogaz expects to report an increased gas production of at least 1 Bcm this year, restoring the country’s output to the pre-war level of 13.5 Bcm of gas, in part because of Ukrgazvydobuvannya’s improved operations.

Naftogaz is confident it will be able to pass this coming winter without having to buy any of the European volumes been kept in the country’s underground storage facilities.

Independents’ pain

Ukraine’s private-sector producers experienced a major downsizing in their market last year following Russia’s invasion, with a major drop in industrial purchases and a government ban on gas exports to Europe for independents.

The various challenges forced several companies to shut in some of their wells last year, Association of Ukrainian Gas Producers chairman Artem Petrenko told a recent industry conference in Kyiv.

Most of the independents’ supply contracts were with industrial companies, which accounted for an estimated 10 Bcm per annum of domestically produced and imported gas before the war, or about one-third of total country’s gas consumption, according to head of strategy and investment at Smart Holding, Artem Syvryd.

Smart Holding, whose partially owned affiliate UK-listed Enwell Energy operates several gas fields in Ukraine’s Poltava and Kharkiv regions, saw its gas output declining to almost a third of previous levels to about 100 million cubic metres per annum due to the war’s impact on the country’s industry and legislative disputes with authorities.

Petrenko said the Association forecasts a positive trend this year in gas production by state-owned gas producers, with independents’ declining gas output coming to a halt as they can sell volumes to Naftogaz and send it for underground storage in the country.

These private gas companies produced about 5 Bcm of gas in the pre-war year of 2021, or about 25% of the country’s total domestic gas supply, a Ukrainian record since breaking from the Soviet Union in 1991, according to Petrenko.