Ukraine's service market development - the tool to achieve the "20/20" program

Yuriy Nagorniak, Production Director of Ukrgazdobycha PJSC

Based on the report delivered during the Ukrainian Energy Forum


Balance structure of Ukrgazdobycha's fields is as follows:

10% - no approvals by regional councils

18% - at the exploration stage

5% - at the field appraisal stage

another 5% - at the field development stage

10% - at the production stage

52% - at the late exploitation stage, require enhanced gas recovery (EGR)



Ukrgazdobycha's fields balance evidences catastrophic picture - 52% of the fields are at the late exploitation stage.

At that, 10% of the new licenses are under consideration by regional councils for over two year (the so-called "idle fields"). The same picture can be observed throughout Ukraine, as the exploration stage is the most risky Upstream sector, so private companies do not want to finance it. The reason for that are apparently the ongoing "state turbulence" and the internal struggle of "political elites".

Extension of life of the 52% of fields requires involving funds in "idle fields", special knowledge-based and low cost services.

 Service segments for separate stages of well maturity



Greenfield deposits involve such services as prospecting seismic servey, exploratory and appraisal drilling, as well as, in particular, such high technologies as 3D modeling, open hole logging, directional drilling, multistage completion and multistage fracturing.

 Brownfield stage (field development and production phase) provide for the main services such as: 3D modeling, open hole logging, well drilling, completion and cementation, traditional fracturing technologies, CT-BHT, standard technologies, including wireline operations/workover rigs of small/medium carrying capacity.

 Fields at the late exploitation stage require the following services: EGR (enhanced gas recovery), velocity string, capillar string, plunger lift, waterproofing technologies, low cost technologies, lifting.

 Costs and revenues within the service life of wells

 It should be noted that during the first 3 to 5 years after commencing dealing with the field, the producing company receives no income. Within this period, the company bears only expenses that gradually grow with the beginning of the appraisal drilling. Already at the stage of field development, after around six years, expenses become lower with due allowance for the receipt of income and payment of taxes. The highest company's expenses fall on the stage of expanded infrastructure development - from obtaining a permit for the field to receiving the first gas.

 Different technologies are applied at different stages of field maturity. The most expensive of them are applied at the stage of exploration and search, the less expensive - at the stage of production, low cost technologies - at the late stage.

 Global development of technologies resulted in the development of hard-to-recover reserves. At the moment, this kind of reserves is not developed in Ukraine. They are at the idle stage due to unfavorable economic environment (until the law on incentive royalty, the end of 2017), poor market of special knowledge-based technologies.


Ukrgazdobycha’s demand for services:

 Among the ordinary technological solutions, a need exists for cementing, logging and coiled tubing, which is 40 to 60%. More than 60% of orders are accounted for wireline operations/workover services. Almost 90% are such "low cost" technologies as artificial lift.

 The need for high-tech and knowledge-based services is distributed as follows:

 - 20% - coil "milling"

- over 20% - directional drilling

- about 10% - turnkey drilling

- about 40% - daily rate drilling

- need for workover ("fishing") - about 60%

- 80% - crosslink fracturing


The demand for special knowledge-based services reaches 100%. It comes to such services as sleekwater fracturing, rotary steerable systems and AHRT cementation.

 By 2020, Ukrgazdobycha PJSC  expects to gradually increase drilling volumes. So, the company intends to drill 568 thousand meters in 2018. In 2019, this figure will grow up to 723 thousand meters, in 2020 – up to 882 thousand meters. In 2018, the number of drilled wells will be 131, in 2019 - 166, in 2020 - 201.

The need for hydraulic fracturing in 2018 is 100 operations.

 10% of Ukrgazdobycha’s fields – that provide us with cheap gas as some politicians say - will go into the "late stage" in the coming years, and if today we do not intensify the EGR extraction coefficient and do not finance technologies for "idle fields" and "extension of the service life of profitability", we will always be at Moscow’s "gas tranquilizer".