Ukraine needs foreign investment, particularly in the energy sector – this mantra is repeated time and again by the authorities. Proven natural gas reserves of more than 1 trillion m³ and government plans to boost gas production to 27bn m³/yr in 2020 from the current 19.9bn m³/yr should draw the eye of investors. The obstacle is decisions made this week in parliament that militate against a healthy investment environment in the sector.
Parliament’s tax committee rejected a draft law to decrease subsoil taxes for gas producers for new wells to 12pc from a current 28pc of the price of gas sold. The decision was a bitter blow to gas producers who lobbied for the new tax rates over several months. “We failed to prove for foreign investors that Ukraine is a good place to invest in gas production and we are left on the world map as a country with one of the highest tax rates for gas production”, said head of Ukraine’s association of gas producers Daniel Maydanik. The tax committee argument that there might be a loss of state revenues was weak, given that producers asked for low rates only for future wells. Besides, the committee approved a drop in tax rates for crude production that will lop 2bn-3bn hryvnia ($76.5mn-$114.8mn) off the 2017 budget. Continue reading
For the US oil and gas industry 2017 can’t come fast enough.
From oilfield services providers to the US independents who have reported their earnings so far for the fourth quarter, the industry has largely given up any hope of a recovery in drilling activities in 2016 and is preparing for another year of pricing pressure. Continue reading
In the span of just a few days, the earth has begun quaking beneath South America’s leading resource nationalists. Hugo Chavez’ successor as the Bolivarian revolution’s leader, Nicolas Maduro, stands to lose his grip on Venezuela´s national assembly in tense 6 December elections. Argentina’s Cristina Fernandez de Kirchner will reluctantly hand the presidential scepter to her foil Mauricio Macri on 10 December. And formally as of this week, Brazil´s Dilma Rousseff faces possible impeachment.
US independents are bracing for their worst results in years when they begin reporting third quarter earnings in coming weeks. But a bleak oil market outlook raises the question: How much worse can it get?
“The narrative for Q3 earnings season will be grim, both with regard to current industry conditions as well as the threatening visibility heading into 2016,” investment bank Simmons & Company said in a recent note. Continue reading