On Monday JKX Oil & Gas PLC announced that Ukrainian authorities had awarded a 33.9 square kilometre extension to the company’s Elizavetovskoye production licence to include the West Mashivske prospect.
The West Mashivske prospect lies to the southwest of Poltava, immediately to the west and contiguous with the Company’s existing Elizavetovskoye production licence. The additional area of 33.9 square kilometres increases the total area of the Elizavetovskoye licence to 104.7 square kilometres The Elizavetovskoye production licence is valid until 31st July 2034.
The primary target in the West Mashivske prospect is the Permian A8 sandstone reservoir; this reservoir is at a similar depth to the very productive Permian A2 carbonate reservoir in the main Elizavetovskoye field. Production will be tied back to the recently expanded Elizavetovskoye production facility.
In a press-release JKX Chief Executive, Dr Paul Davies, said “This further award is a recognition of our ability to develop the potential of our Ukrainian licences. However, we have been forced to suspend drilling operations in Ukraine because of the current punitive levels of production tax and restrictive currency controls. Drilling on the West Mashivske prospect will also be deferred until investment conditions improve.”
Due to a Decree issued in November, in which sales restrictions were imposed on private gas producers by the Ukrainian Government, JKX anticipated that gas sales may reduce to less than 50 per cent of its production capacity and would necessitate shut-in of a proportionate level of gas production.
In February, JKX launched legal proceedings against the Ukrainian government seeking compensation of more than $180 million for losses it suffered from Ukraine’s failure to treat JKX’s investments in a ‘fair and equitable’ manner.
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