Ukraine to Conduct Two Tenders for Exploration and Production of Oil & Gas at Foros and Skifska fields of the Black Sea under Production Sharing Agreements

On 23 May 2012 the Ukrainian Government approved terms for 2 tenders on execution of production sharing agreements for production of oil and gas at deep water parts of the Black Sea by Resolutions No. 454 (the "Foros Resolution") and 455 (the "Skifska Resolution"). Resolutions become effective on 30 May 2012.

The main tender terms and conditions provided by the Foros and Skifska Resolutions are as follows: The winner of each tender is obliged to pay a signature bonus no less than USD 300 mln. Amount of the bonus suggested by each tender participant will be one the most important criteria for choosing the tender winner. The minimum size of investments in the scope of the 1st stage of exploration cannot be less than USD 200 mln. Size of investments for the 2nd stage of exploration, including pilot production, and the overall investments in the project, including commercial production, will be determined based on the results of each tender. The maximum share of the investor in compensation cost is 70 percent and the minimum share of the State in the profit cost is 20 percent. Price of the tender documentation package, which includes geological information, is USD 1,250,000 for Foros subsoil section and USD 1,500,000 for Skifska and the tender participation fee for each tender is USD 125,000. Acreage of the Foros field is 13,614.9 km2 and 16,698.2 km2 for the Skifska field. The term of PSA is 50 years.

The official announcement of tenders on execution of production sharing agreements for Foros and Skifska fields will take place 2 weeks after the Foros and Skifska Resolutions become effective. Tender applications are accepted within 2 months since the official announcement of tenders and the winners will be announced 1 month after the deadline for submission of tender applications.

The list of persons eligible for submitting a tender application includes, inter alia: citizens of Ukraine, foreign natural persons, Ukrainian and foreign legal entities, an association of legal entities.

If your oil & gas company would like to get convenience English translation of Foros and Skifska Resolutions, please send your request to Yaroslav Petrov.

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