Naftohaz Ukrainy has signed a pact with Poland's PGNiG that could see the pair jointly explore onshore and offshore blocks in Ukraine.

The state gas importer and distributor hatched the memorandum of understanding aimed at sharing exploration risks on acreage recently awarded to Naftohaz Ukrainy.


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One tract where the partners may jointly explore is the Berestyanska block in the Lviv region in the west of the country.

In geological terms, the region may contain an extension of gas structures that have been exploited by the Polish company for over 70 years, PGNiG said.

For Naftohaz, the agreement is another leap forward in securing co-operation and participation from outside investors in Ukraine’s long-term and expensive gas projects, previously deemed unattractive by outsiders because of perceived political, economic and legal instability.

PGNiG's contribution to the potential joint co-operation will include competencies in advanced gas exploration methods such as 3D seismic surveying, it said.

These methods have enabled PGNiG to discover new gas reserves in the Sub-Carpathian region in Poland and the company expects that the use of these technologies in Ukraine could yield similar results.

The Berestyanska block covers about 286 square kilometres and has been explored by Naftohaz’s gas-producing subsidiary Ukrgazdobycha.

In December last year, authorities in Kiev agreed to a proposal from Naftohaz to convert the licence for the block into a 50-year production sharing agreement, providing protection against adverse changes in taxes and legislation to increase the tract's appeal to international investors.

PGNiG added in its statement that it is also interested in other exploration and production opportunities near the border with Poland.

In February and March, Naftohaz signed similar memos to consider joint co-operation in gas exploration with Romania’s oil and gas explorer OMV Petrom and Israel’s oil and gas holding Naphtha Israel Petroleum.

Naftohaz is aiming for Ukraine to be energy independent within the next 10 years by driving up its natural gas production.

In October last year, PGNiG signed an agreement to create a joint venture with Ukraine’s privately held ERU Management Services to explore and develop a licence block in the west of the country that is adjacent to the Przemysl gas field in Poland.

The block is located next to the Poland-Ukraine border in the Lviv region in Ukraine and has not been explored.

The Przemysl field, located across the border in Poland, has been producing gas since the 1960s.