10.000
%
Negative
115
mm boe
6
%
The prospect of a longer conflict with Russia continues to rule the country out of investment. However, the goodwill towards the people of the Ukraine will be reflected in a rapid reversal of those fortunes when the conflict finishes.
January 25, 2024
Europe - East
mm bbl
bcf
Eastern Europe, bordering the Black Sea, between Poland, Romania, and Moldova in the west and Russia in the east.
Multiple (PSC/Concession)
The royalty/tax system in Ukraine is particularly complex. Various levies are made on production, with rates specified in local currency and differentiated according to the depth of the reservoir and where production is sold. These rates are subject to change annually and, for gas, are tied to regulated prices. As most of the levies are fixed amounts per unit of production, with no deduction for costs, the system is very regressive. When prevailing prices are low, the government generates a significantly higher share of revenue.
Despite Russia’s full-scale invasion, Ukraine offers a large consumer market, a highly educated and cost-competitive work force, and abundant natural resources. The government continues to advance legislation to capitalize on this potential with numerous corporate governance and other economic reform draft laws designed to bring Ukraine into compliance with EU standards and regulations currently moving forward. Ukraine’s increasing momentum toward integration with the EU offers potential opportunities for investors seeking to access the EU market. Additionally, Ukraine’s reconstruction is anticipated to attract hundreds ofbns of dollars from governments, International Financial Institutions (IFIs), and the private sector. Corruption, especially in the judiciary, remains a challenge. Combating corruption, reforming Ukraine’s judiciary as well as decentralisation, deregulation and de-oligarchisation are ongoing priorities for Ukraine’s government.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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