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OIL & GAS: Liberalisation of geological data gets closer<\/strong><\/p>\n On 7 November 2018, the Ukrainian government adopted Resolution No.\u00a0939 \u2013 \u201cQuestions on the Transfer of Geological Information\u201d\u00a0(\u201cResolution No.\u00a0939<\/strong>\u201d), which establishes a new procedure for the transfer of geological data and abolishes some out-dated secondary legislation. The new\u00a0\u201cRegulations on the Transfer of Geological Data\u201d\u00a0<\/em>(the \u201cNew Regulations<\/strong>\u201d), which form part of Resolution No.\u00a0939, are outlined below.<\/p>\n Updated approach to classification<\/em><\/p>\n The New Regulations revisit the definition of geological data and its types: initial (primary) geological data and processed (or secondary) geological data. Although the different types of geological data imply different legal regimes and obligations for their disclosure, the basic obligation of the owner or user is to ensure the storage of geological data.<\/p>\n Tradable, but subject to notification\u00a0<\/em><\/p>\n Generally, the New Regulations provide that geological data can be traded or transferred\u00a0to a third party or contributed to the charter capital of the subsidiary company. However, if the geological data belongs to classified information, it may not be transferred to certain entities and individuals to whom the law of Ukraine \u201cOn Sanctions\u201d applies.\u00a0Similarly, other limitations on classified information may apply.<\/p>\n The transfer of geological data has its own peculiarities. The creation, purchase or\u00a0transfer of ownership or of a right to use privately owned geological data must be accompanied by a notice to Ukraine\u2019s State Geology and Subsoil Service (the \u201cDerzhgeonadra<\/strong>\u201d).<\/p>\n Information from such notices will be stored in the Geological Data Catalogue that will be created and maintained by the State Fund on Geological Data (\u201cGeoinform<\/strong>\u201d).<\/p>\n State- and privately-owned geological data<\/em><\/p>\n Depending on whether the geological data has been acquired by using private funds or has been financed from the State Budget of Ukraine, it will be classified as privately owned or as state-owned. The legal regime for each type of geological data is different.<\/p>\n Once\u00a0<\/em>the State Repository of Geological Data and Rock Materials is established, initial geological data owned by the state (\u201cInitial Data<\/strong>\u201d) will be transferred to it. Further\u00a0transfers of Initial Data are not allowed, except for a transfer via temporary use under a contract.<\/p>\n The state or municipal authorities and some state agencies of other countries may use the Initial Data free of charge for the performance of obligations under exploration contracts, for geological surveys and for other works for the purpose of the development of Ukraine\u2019s subsoil base. The newly acquired geological\u00a0data should be transferred free of charge to the grantor of the Initial Data, and a corresponding provision should be included to the contract.<\/p>\n State-owned processed geological data is free of charge and is available online at the website of Geoinform.<\/p>\n However, a subsoil licence-holder is obliged to pay for such data, the price of which is calculated in accordance with secondary legislation.<\/p>\n Privately owned geological data is not subject to any obligatory disclosure, unless its owner voluntarily publishes it on its own website or on the website of Geoinform. The latter may disclose such data exclusively upon the owner\u2019s written consent.<\/p>\n As stated above, an owner of geological data may transfer such data to third parties, subject to compulsory notification thereof, and if the transfer is not prohibited or restricted by law (in case of classified data).<\/p>\n An owner of geological data may not keep it to itself for prolonged periods of time. Three years after the subsoil licence has been terminated or revoked, the licence-holder is obliged to\u00a0publish processed geological data (unless otherwise stated in a binding court decision). Consequently, the initial geological data shall be deemed as state-owned geological data, although how this provision will work in practice is not yet clear.\u00a0<\/p>\n OIL & GAS: More new fields and deregulation expected to stimulate natural gas production\u00a0<\/strong><\/p>\n Ukraine\u2019s Cabinet of Ministers has updated the implementation plan for the Concept to Develop Ukraine\u2019s Gas Production Industry by 2020 (the \u201cPlan<\/strong>\u201d), which aims to increase natural gas production to 27.6 bcm in 2020, compared to 19.9 bcm in 2015.\u00a0(Order of the Cabinet of Ministers of Ukraine “On Amendments to the Plan of Measures to Implement the Concept for the Development of the Gas Extraction Industry of Ukraine” No. 842-r dated October 24, 2018<\/em>, published on 16 November 2018).<\/p>\n The new Plan sets ambitious goals in terms of the number of E&P licences scheduled for sale (at least 50), including at least five offshore blocks that will be offered either under a production sharing agreement or through the granting of an E&P licence.<\/p>\n In addition, the new Plan hints at how the rules of the game will be changed. For instance, rights under a hydrocarbon licence may become transferrable, and the requirement for seeking consent from the regional authorities (currently obligatory to obtain a licence) may be abolished, if such measures are successfully implemented.<\/p>\n Overall, the steps in the new Plan show a more mature approach toward boosting Ukraine\u2019s natural gas production. This includes adopting best practices in the appraisal of hydrocarbon resources (PRMS, JORC) and\u00a0preparing a draft law on a \u201cone-stop shop\u201d procedure for drilling and operating natural gas wells (or a new permitting document that would combine the rights to land and\u00a0safety- and environment-related rights).<\/p>\n Among other initiatives, the new Plan suggests the adoption of a new Subsoil Code and the revision of secondary legislation on the calculation of the price for geological data to ensure transparency and a favourable fiscal regime, in particular for unconventional hydrocarbons.<\/p>\n _________<\/p>\n For further information please contact:<\/p>\n Olena Kuchynska<\/strong>, Partner, at olena.kuchynska@kinstellar.com<\/a>,<\/p>\n Viktoriia Pysmenna<\/strong>, Associate, at viktoriia.pysmenna@kinstellar.com<\/a>,<\/p>\n\n
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