Ukraine

EITI Status Meaningful progress
EITI Member Since 2013
Latest Data From 2015
Latest Validation 2017
Website EITI Ukraine

Overview

Ukraine is rich in various natural resources; however, internal mismanagement and external interference in the country’s integrity result in the extractive sector contributing a relatively insignificant amount to the economy. The main sub-sector in Ukraine is the petroleum sector. Government revenues in 2015 from petroleum companies, which were reconciled in the EITI Report, accounted for 77% of total reconciled revenues. Coal accounted for roughly 11% while the metal ores (iron, manganese and titanium) accounted for 12%. Another important sub-sector is the oil and gas transportation system, operated by the SOE Ukrtransnafta PJSC.

The government aims at bringing economic growth and foreign investment by tackling corruption and reforming the regulation of the extractive industries and energy transit.  

Beneficial ownership disclosure

Ukraine established the world’s first beneficial ownership register of legal entities, and asset register for government officials. In 2014, the government adopted legislation on beneficial ownership disclosures for all companies. Since then, about 70% of companies reported, including the extractive industries. The data is publicly accessible through unified company register hosted by the Ministry of Justice.

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 2013 production of oil amounted to 3.07 million tons and natural gas amounted to 21.45 billion m3. According to State Statistics Service the natural gas and oil produced in Ukraine are not exported whilst ferrous metals hold 18.7% of country’s export. Five new deposits were discovered in 2013 in the east oil and gas region.

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

The contribution of the oil and gas sector to Ukraine’s GDP is insignificant. According to the State Statistics Service, the oil and gas sector holds about 1.3% of Ukraine’s GDP. The 2013 EITI report documents USD 3.3 billion of payments by oil and gas companies (including oil and gas transportation companies).

Revenue collection

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Bubble Chart: Government Receipts by Entities (Top 5)

Reconciled revenues by top 5 companies

Revenue allocation

The major share of oil and gas payments is channeled to the state budget. Taxes and other regular fees paid to the state budget may be used to fund any budget items. Therefore, the revenues from oil and gas received by the state are used in the same proportion as other revenues in the country. The Budget Code of Ukraine No. 2456-VI 2010 determines the procedures for allocation of tax revenues between state and local budgets.

Starting from 1 January 2018, 5% of the rental payments from oil and gas companies will be channeled to the regions where extraction occurs, which will greatly contribute to improved dialogue and revenue sharing between local communities, extractive companies and authorities.

Social and economic contribution

  • The oil and gas industry (without transportation of oil and gas) employed 55 600 people in 2013. This represents approximately 0.48% of employed workers in the economy of Ukraine.

  • According to the State Statistics Service of Ukraine, the direct GDP contribution of the oil and gas sector (without transportation of oil and gas) amounted to UAH 20.0 billion or about 1.3 percent of Ukraine’s GDP. The output of oil and gas sector (without transportation of oil and gas) amounted to UAH 26.52 billion in 2013 or about 0.8 percent of the output of goods and services in Ukraine

Policy recommendations and reforms

On 16 June 2015, Parliament adopted a Law entitled “Introduction of Amendments to Certain Legislative Acts of Ukraine on Ensuring Transparency in the Extractive Industries” that requires extractive companies to report in accordance with the EITI requirements. The Cabinet of Ministers issued Regulation #1039 to define the mechanism for collection and dissemination of information, required by the EITI Standard.

Following the recommendations from the EITI reporting, the government, with support from the MSG, developed a draft Law #6229 entitled "Transparency of Information in the Extractive Industries” that passed the first reading in Parliament in February 2018.

Implementation

The EITI Report 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 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 providing a platform for an informed public debate. Civil society plays a central role in the EITI by being the main driver for the reforms and by keeping the government accountable for the revenues received.

Governance

EITI implementation has complemented broader economic, financial and institutional reforms, in particular by adopting a Law #521-VIII entitled “Amendments to Certain Legislative Acts of Ukraine on Ensuring the Transparency in the Extractive Industries”, and by amending a Law on “State Registration of Legal Entities and Individual Entrepreneurs” and a Law “Budget Code”.

Timeline

Validation

Ukraine's Validation against the Standard commenced on 1 July 2017. The country was admitted as EITI candidate in 2013.

Ukraine's progress by requirement

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