The interagency commission could not decide on the winner of the tender until Azerbaijani Caspian Drilling International Ltd. has withdrawn from the tender. After that, Trident Black Sea owned by Ilya Ponomarev, former member of the Russian Duma, was announced a winner.
The results of the tender for Dolphin development were criticized by the Association of Gas Producers of Ukraine. And Volodymyr Groysman, Prime Minister, said he would propose to conduct the tender anew as he hoped for a more representative and competitive tender.
So how should you find reliable investors in the gas production sector?
The main characteristics that should be taken into account when the state enters into an agreement with an investor for 50 years.
Length of competition
If we want foreign investors for a site, they need to be “reached”. Let’s be honest, there’s no long queue to reach us. In June, at a conference in Paris, I asked Anglo American if they had ever considered Ukraine. “We haven’t ever thought about it and I don’t know why,” replied the representative.
Information about the site
The more information, the clearer a company will understand what to do and how attractive the offer is. The better the application will be. These materials were drawn up by the State Service of Geology and Mineral Resources of Ukraine and the Association of Gas Producers of Ukraine, but they should release more and distribute more extensively.
Process transparency and publicity
It is fair to say that this tender was open to external experts. The Ministry of Energy granted unrestricted access to all applications. There were such nuances when they once forgot to inform someone about a meeting, but it can be easily fixed. The principle of openness should be observed moving forward.
Evaluation should also be based on what the government needs first: Money from production sharing? First stage bonus? Speed of investment and getting first results? It’s impossible to get everything at once, we must prioritize.
It is more strategic to give an investor the opportunity to invest (evaluate the amount of investment and drilling obligations), but to achieve the most favourable portion in production sharing for the state. More tactically, when you need money immediately, you should look at the bonuses, and then this part may very often go not to the budget but in someone’s pocket.
Government’s negotiating position
Negotiations with a company that has already entered into many similar contracts need to be prepared. Lawyers and negotiators with years of experience will sit on the other side of the table, newcomers – on our part. For this purpose, it is necessary to have an already formed position on the “red lines”, ideally – a model agreement to be used for negotiations.
President of DiXi Grour