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• Oil and gas extraction (industrial development of fields);
• Construction and exploitation of underground facilities that are not associated with
extraction of minerals, including underground storage of oil or gas, and facilities for disposal
of oil and gas industry waste products and related waters. It should be noted that in 2011 some
changes in legislation concerning oil and gas industry took place. Particularly, some
amendments were made to the Law of Ukraine “On Production Sharing Agreements (PSA)”.
This law gives several advantages to investors. No limits are set on the field size that is given
for developing. Whereas the Law of Ukraine “On Oil and Gas” sets 500 km2 limitation on
field size located on land and 1,000 km2 located offshore. The PSA allows to obtain license –
for exploration, followed by industrial development, on up to 50 years with possible
prolongation. The participants of the oil and gas industry shall be taxed under the general
rules with some peculiarities. Ukrainian legislation allows exploration activities to be
conducted under either a Production Sharing Agreement (PSA), or a Joint Venture Agreement
(JVA). The main distinction between the two methods is that under the PSA, corporate
income tax (CIT) is calculated with reference to production volume, whereas under the JVA,
CIT is levied on net profits. PSA is one of the most effective mechanisms of public-private
cooperation in the field of mineral resources exploration. The special regime of taxation
applies to the investors being a party to the PSA which consists in substitution of national and
local taxes, fees and duties by distribution of manufactured products (with the exception of
VAT, CIT, PIT, uniform social security contribution in respect of employees, charges and
duties for state services and the fee for use of subsoil for the purposes of exploration). The
legislative framework for JVA is provided by the Civil Code of Ukraine. Under JVA
agreement the partners undertake to act jointly without the establishment of a legal entity in
order to achieve a certain legitimate goal. The joint activity can be carried out based on the
consolidation of partners’ capital (simple partnership) to correlated issues for its
consideration, suggestions and approval. Within its jurisdiction, the Committee is entitled to
perform the parliamentary control.

Task III. Comprehension check.
1. What is the leading enterprise in Ukraine’s energy complex?
2. What is the difference between leading players?
3. What must Special permission be obtained from the State Service for Geology and Mineral
Resources of Ukraine for?
4. How many types of special permissions that may be obtained? What are they?

Task IV. Write a short summary of the text.

Task V. Choose the proper word and fill it in the blanks.
Deposits, mining, located, reserves, estimated, amounts, produce, exploration, reach, volumes

According to USA experts, Ukraine has shale gas … at the level of 1.176 billion m3. The
largest … of shale gas in Ukraine are located in the Carpathians. In L’viv region were found
five major fields where open-cut … could be used, in Ivano-Frankivsk were discovered six
deposits, in the Transcarpathian region – two, Chernivtsi region has one perspective gas field.
However, today major deposits are Yuzivsky area (7,886 km2) … in the Donetsk and Kharkiv
region, and Olesky area (6,324 km2) located in Ivano-Frankivsk and L’viv regions. Reserves
of Yuzivsky area are … to be in range of 4 till 10 billionm3of gas. Olesky area has gas
reserves of smaller …. The State Service for Geology and Mineral Resources of Ukraine
expects them to be 2.5 billion m3.

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