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.  

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Tax and legal framework

The legislative framework that governs the oil and gas production is complicated and consists of several regulatory instruments which contain provisions that are not always compatible. VAT, corporate profit tax and a rent tax for subsoil use are the main taxes for extractive industries.

Ukraine has a license registry which is accessible online. Since October 2014 all companies registered in Ukraine are required by law to disclose their beneficial owners in a public register available online. The legislation of Ukraine does not require any disclosure of agreements related to subsurface resource use.

Contracts

There is no single government policy on contract disclosures, and no requirements to disclose contracts exist in laws governing the legal agreements used in Ukraine. The EITI Report outlines terms and conditions of contracts, especially for model agreements (e.g. PSAs). However, there are significant efforts towards making contract disclosures a reality, through the Draft Law of Ukraine #6229 On disclosure of information in extractive industries.

Licenses

Extractive companies have to apply for a special subsoil use permit that usually is awarded through auction. The State Service for Geology and Mineral Resources of Ukraine is responsible for issuing permits and regulations. All information on bidding is available online. Product sharing agreements define conditions for hydrocarbon exploration and extraction and are obtained through direct negotiations.

Additionally, an interactive map includes the visual delineation of the license coordinates and serves as an alternative route to access license-information.

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.

Beneficial Ownership Roadmap - Ukraine
The EITI Chair’s Awards for Beneficial Ownership Transparency
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

Initializing chart.

Mineral Production

Initializing chart.

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

Initializing chart.

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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EITI Reports and other key documents

2016 Ukraine EITI Report

Published Date: 
May, 2018
Publisher: 
Ukraine EITI

This EITI Report covers Ukraine's extractive sector in 2016. It was published in May 2018. The Report is available in English and Ukrainian.

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Ukraine 2016 Annual Progress Report

Published Date: 
June, 2017
Publisher: 
UAEITI

The Annual Progress Report provides an overview of all EITI Ukraine's activities during 2016.

The report is available in English and Ukrainian.

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2014-2015 Ukraine EITI Report

Published Date: 
February, 2017
Publisher: 
Ukraine EITI

This EITI Report covers Ukraine's extractive sector in 2014-2015. It was published in February 2017. Attached below is a summary report. 

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2013 Ukraine EITI Report

Published Date: 
November, 2015
Publisher: 
Ukraine EITI

This EITI Report covers Ukraine's extractive sector in 2013. It was published in November 2015. 

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View all documents related to Ukraine in our publications library

Contacts

National Coordinator

International Secretariat 

Oliana Valigura

olianavaligura
Country Manager
ovaligura@eiti.org

Oliana is Country Manager at the EITI International Secretariat working with Eastern Europe, the Caucasus and Central Asia. Nationality: Ukrainian Prior to joining the EITI in November 2015,

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Olesia Tolochko

live:olesia.tolochko
Country Officer
otolochko@eiti.org

Olesia supports Asia team at the International Secretariat.

Olesia holds bachelor’s degree in Economic Theory from Ukraine and MSc in Strategic Marketing Management from Norway.

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