Ukraine

Statut ITIE Progrès significatifs
Joined EITI in 2013
Dernières données de 2016
Latest Validation 2017
Site Internet EITI Ukraine
Last updated 23 July 2020

Overview

The extractive sector plays an important role in Ukraine’s economy, amounting to 5.9% of GDP. The industry contributed UAH 120 billion to the state budget, representing 41% of government's revenues from 100 biggest taxpayers in 2018. The major extractive companies operating in the country are UkrGasVydobuvannya PJSC (gas), Ukrnafta PJSC (oil) and DTEK PJSC (coal). They paid UAH 41.26 billion, UAH 15.54 billion and UAH 8.44 billion respectively. Despite the developed extractive sector, Ukraine remains dependent on imports of extractive commodities.

Ukraine joined the EITI in 2013 aiming to strengthen governance and reduce corruption in its extractive sector. The country has since published four EITI Reports, covering 2013-2017, that provide detailed analysis of the extractive sector, including oil and gas, hydrocarbon transportation, coal, iron, titanium and manganese ores, clays and quartz sand. In order to enhance the implementation of the EITI Standard, the country has also adopted legislation that provides incentives for companies to disclose information.

 

Beneficial ownership disclosure

Ukraine established the world’s first beneficial ownership register of legal entities under the Ministry of Justice and asset register for government officials. In 2014, the government adopted legislation on beneficial ownership disclosures for all companies.

Since May 2017, the government has been working with OpenOwnership on high quality data production in order to integrate its national central register of beneficial ownership with the OpenOwnership Register. 

The EITI report is a social agreement between stakeholders. Our oil and gas industry can become a sector we can all be proud of.
Olga Bielkova, Member of Parliament

Production

In 2017, Ukraine produced 34.9 million tons of coal, 20.5 bcm of gas and 2.2 million tons of oil. Oil and natural gas production are mainly led by state-owned enterprises. In 2017, Ukrgazvydobuvannia PJSC produced 15.3 bcm of natural gas, representing 74.3% of total national production. The remaining amount was produced by Chornomornaftogas PJSC, Ukrnafta PJSC and others.

Most of the reserves and extraction volumes are concentrated in the eastern region (Poltava and Kharkiv Oblasts), where 239 fields account for 80.96% of the reserves and 94.49% of the total production. The share of the western region (Lviv, Ivano-Frankivsk Oblasts) in the total production volumes amounts to 5.77%. The largest company in oil sector is Ukrnafta PJSC, and DTEK is the largest one in the mining sector.

Natural resources

CommodityReservesUnitSignificance
Oil1.64billion tons
Gas7254.3billion m3
Coal 112.3billion tons1.5% of world's brown coal reserves.
Iron ores20.9billion tons

Oil and gas production

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Mineral Production

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Revenue collection

As of 2018, the extractive sector holds 6% of Ukraine’s GDP, according to the State Statistics Service. The biggest tax payer in 2018 was Naftogaz, which was accountable for 23.3% of the total revenues from the extractive industry. In 2018, the extractive sector contributed around USD 4 billion to the national economy.   

Revenue collection: revenues over time

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Main revenue recipients by government entity

Reconciled revenues by top 5 companies

Revenue allocation

The majority of oil and gas payments made to the government is channelled to the state budget, and is received in the form of taxes and other regular fees. The Budget Code of Ukraine No. 2456-VI 2010 determines the procedures for allocation of tax revenues between state and local budgets.

Starting 1 January 2018, 5% of the rental payments from oil and gas companies are being channeled to the regions where extraction occurs through subnational payments, contributing to improved dialogue and revenue sharing between local communities, extractive companies and authorities.

Social and economic contribution

  • In 2017, the extractive sector engaged approximately 213 thousand full-time employees, amouting to 11.2% of all employees in the industry and 2.8% of all full-time employees in Ukraine. Approximately 66% of all employees in the extractive industries are concentrated in three main regions: Dnipropetrovsk, Donetsk and Poltava regions.
  • Capital investments in the Ukrainian mining industry amounted to UAH 21.4 billion from January to September 2017.
  • Social and charitable spendings by companies amounted to UAH 1.357 million in 2017. The largest share of those payments (70.3%), were made by metal ore mining companies.

Policy recommendations and reforms

Ukraine’s national parliament passed the widely-backed Law 2545-VIII ‘On ensuring transparency in extractive industries’ on 18 September 2018. The legislation sets out legal principles for the collection, disclosure and dissemination of data on Ukraine’s extractive industries. 

Since 1 January 2018, Ukraine enforced the Law on Amendments to the Budget Code of Ukraine Regarding the Inclusion of Rent Payment for the Use of Subsoil for the Extraction of Oil, Natural Gas and Gas Condensate No. 1793-VIII. The law stipulates that 2% of the rent paid by companies be directed to regional budgets, 2% to district budgets and 1% to local government budgets at the place of location (production) of the relevant natural resources. As an exception, budgets of cities of republican and regional significance and budgets of the amalgamated communities receive 3% of the rent. The remaining 95% of rent payments are directed to the general fund of the state budget.

Implementation

Ukraine joined the EITI on 17 October 2013. EITI reporting covers oil, gas and mining industries; in particular, coal, iron, manganese, titanium, clay, and sand. Metal ores account for 97% of Ukraine’s extractive sector exports – almost 6% of total exports of Ukraine. The national objectives for EITI implementation are the following: increasing transparency and data disclosure in extractive industries and strengthening partnership between government, local self-governing entities, companies and local communities to decrease tensions.

The strength of Ukraine’s EITI implementation has been its success in using the process to address local concerns, both through active dissemination and outreach efforts and by informing public debate. As active participants in the EITI process and main drivers for reform, civil society organisations such as xx and xx play a central in keeping the government accountable for the revenues received.

Governance

The Ministry of Ecology and Natural Resources is responsible for implementing the EITI. The national secretariat, hosted by the Ministry, supports the functioning of the multi-stakeholder group (MSG) and delivery of the work plan. Yaroslav Demchenkov,  Deputy Minister on European Integration is charing the MSG. 

EITI implementation has complemented broader economic, financial and institutional reforms. The recently adopted Law 2545-VIII aims to harmonise Ukraine’s legislation with the EITI Standard and the EU Accounting Directive.

Timeline

Validation

Ukraine's Validation against the Standard commenced on 1 July 2017. As of 29 June 2018, the country made meaningful progress in meeting the EITI Standard. Ukraine has eight corrective actions to address.

The second Validation will commence on 30 June 2020.

Ukraine's progress by requirement

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