Changes to Law on Joint Oil & Gas Activity Pass on First Reading

Yesterday, parliament approved changes to the law “On Production Sharing Agreements” in the first reading. The changes are supposed to improve the legislative environment for the parties involved in joint oil & gas projects in Ukraine. Vladimir Nesterenko: It is pretty obvious that the changes to the law are the product of a working group formed last year in an attempt to finalize the deal between the Ukrainian government and Vanco International. The latter won a deepwater drilling contract for the Prykerchenska bloc in 2006. At first glance, the changes are generally concentrated on making (1) a law “On PSAs” and (2) the conditions of PSAs to override other laws and rulings currently regulating the domestic oil & gas industry. However, in our view, the document voted on by Rada is quite crude and still requires thorough expertise to avoid contradictions with existing legislation.