A discussion platform "The future of gas production in Ukraine" has been organized by the Association of Gas Producers of Ukraine on September 28. The participants of the discussion were MPs, NGOs, natural gas producers, and representatives of the Ministry of Finance of Ukraine. One of the main discussion topics was the issue of tax system in the industry.

Daniel Maydanik, the Association's Chairman of the Board, has presented the forecasted development of the industry in favorable fiscal conditions. The main idea of the proposed changes was maintaining the budget revenues unchanged, while effectively decreasing the royalty. Such a decrease will allow to expand the revenue tax base, in particular due to an increase in natural gas production in Ukraine. At the same time, the industry is expecting the implementation of the roadmap of gradual transit to new tax system in the medium-term. Such shift will allow to attract new foreign investments.

Today the companies argue for setting a stimulating flat royalty rate starting in 2017 at 12% for new investments. In particular, it will be applied to drilling projects on brown- and greenfields. Increased investments and new technologies will become the main driving force of the natural gas production growth to the levels that are necessary to achieve energy independence by 2020, as planned by the Government.

Head of the Tax and Customs Policy, and Accounting Methodology Department at the Ministry of Finance of Ukraine, Yuriy Romaniuk, has stated that his department supports the idea of a stimulating royalty on new investments starting next year. This measure should support the domestic production and facilitate substitution of imports.

According to the report of Daniel Valk, CEO of JV Poltava Petroleum Company, his company has been operating in Ukraine for more than 20 years. In this time frame, the company has paid almost $800 million of taxes to the Ukraine's budget. However, the company does not perform any drilling currently. "We are not drilling for 4 years. We are a transparent international company, and thus we evaluate the economics of drilling on our fields in Russia, Ukraine, or other countries in the world. Of course it is more economical to drill in countries, where the environment in the industry is transparent and predictable. And until the government creates an environment attractive for international investors to invest in, wells will not be drilled. We are ready to invest, and we support the country's course towards energy independepcy. We are ready to aid the government in achieving this goal, but we need to know, what the environment will be like tomorrow" – stated the CEO of an international company.

Taking into consideration the proposals of the participantsof the meeting, acting Head of the Energy Industry Committee of the Parliament, Oleksandr Dombrovsky stated that he will initiate a joint meeting with the Budget and Industrial Development Committees to elaborate a model of the fiscal policy for the industry that will facilitate its growth.