Ukraine

EITI Status Yet to be assessed against the 2016 Standard
EITI Member Since 2012
Latest Data From 2015
Website EITI Ukraine

Overview

Ukraine is rich in various natural resources. Extensive oil and gas extraction before 1990s has exhausted country’s easily accessible hydrocarbon reserves leaving it dependent on imported energy commodities. However, Ukraine has a significant potential for development of explored oil and gas fields including deep water offshore reserves and shale gas. The country also plays a significant role as an oil and gas transit hub between Europe and Russia. 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 passed a law in 2014 requiring an upfront disclosure of beneficial ownership of companies to the Ukrainian authorities. All companies previously registered in Ukraine are required to disclose their ultimate beneficiaries in a public register. The 2014 EITI Report comments on this effort, noting that 66 of the 120 extractive companies covered by the EITI Report have disclosed their beneficial owners in the public register at 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. For example, according to Ukraine’s 2013 Budget 50% of income was spent on social assistance and education.

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

According to the recommendations from the first EITI Report, Ukrainian multi-stakeholder group together with external experts and Members of the Parliament has developed a draft Law on Disclosure of Information in the Extractive Industries that was registered in June 2016 for vote in the Parliament of Ukraine.

Implementation

Coal and iron ore will be covered in the next EITI report. This may be challenging as the main concentration of coal mining is in the Eastern part which is a conflict zone. The Independent Administrator will conduct a scoping study to quantify coal sector revenues, and also explore materiality of other natural resources such uranium.

Governance

The Law 521-19 on Amendments to laws regulating transparency in extractive industries in Ukraine obliges "subsoil users and owners of special permits for oil and gas subsoil use to provide and disclose information about state and local taxes, fees and other payments, as well as on the production (economic) activity". Government entities administering these taxes, fees and other payments are also obliged to disclose those figures, in addition to contextual information. Further, governmental authorities charged with conducting geological surveys, use and protection of mineral resources must provide and publish information on the status of these activities.

Draft Law on Disclosure of Information in the Extractive Industries was registered in June 2016 for vote in the Parliament of Ukraine.

Timeline

Validation

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