Ukraine cuts natural gas production tax to 6%-12%

Ukraine’s parliament approved on Dec. 7 changes to the
tax code to reduce the natural gas production tax for new wells (spudded after
Jan. 1, 2018) to 12% from 29%. For deep wells (over 5,000m), the tax will
decrease to 6% from 14%. On top of that, parliament approved a tax cut for the
production of gas condensate to 29% from 45% (and to 14% from 21%  for
deep wells). Additionally, parliament voted to charge a 1.25% production tax
for gas produced based on production sharing agreements.

Alexander Paraschiy: This 
long awaited initiative will allow Ukraine to count on boosted investment into
the production of natural gas and improve its energy independence. Clearly,
this could be a price trigger today for listed gas stocks like JKX Oil &
Gas (JKX LN), Regal Petroleum (RPT LN) and Cub Energy (CUB CN). Also it will be
beneficial for the subsidiaries of Ukraine’s largest private energy holding
DTEK and biggest state-controlled holding Naftogaz.