Ukraine - Oil and GasUkraine - Oil and Gas
Overview
Data in USD thousands
| 2017 (estimated) | 2018 (estimated) | 2019 (forecast) | 2020 (forecast) | |
| Total Local Production | 72.7 | 81.7 | 95.7 | 97.0 |
| Total Exports | 30.0 | 33.0 | 36.0 | 42.0 |
| Total Imports | 332.1 | 397.1 | 465.0 | 494.6 |
| Imports from the U.S. | 39.4 | 55.4 | 58.0 | 60.0 |
| Total Market Size | 374.8 | 445.8 | 524.7 | 549.6 |
| Exchange Rate: 1 USD | 27.2 UAH | 29.3 UAH | 29.5 UAH | 30.8 UAH |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Source: National Sources/BMI; Total Imports and Imports from U.S.: TradeStat Express
*There is no accurate statistical data on the size of the medical equipment market.
On January 1, 2018, new healthcare reform laws became effective in Ukraine. These reforms are the first comprehensive change to the country's health system since independence in 1991. This program was launched on the primary medical care level starting from July 1, 2018 and will be fully implemented on all levels of medical care beginning January 1, 2020. The cost of medical services is covered by payments made to healthcare institutions by the newly created National Health Service (NHS). As of the beginning of 2019, 97% of healthcare facilities had switched to the new financing model, and around 20% of these were private institutions. The NHS paid $128.6 million to healthcare facilities in 2018, and $49.6 million in January 2019.
Under the new system, patients can choose their own doctor, and they are now in the process of signing declarations that will be included in the electronic health database. As of April 2019, 26 million people, equal to nearly 60% of the population, had signed declarations with family physicians, therapists or pediatricians.
A list of medical services, medical devices and pharmaceuticals to be provided to patients free of charge will be adopted each year as part of the state budget. The costs of emergency, primary, secondary, tertiary and palliative care, including services and medications, will be fully covered by the state under the healthcare guarantees program. At least 5% of GDP will be allocated each year for the healthcare guarantees program.
There is no accurate statistical data on the size of the Ukrainian medical equipment market. According to the BMI forecast, the Ukrainian medical device market will record double-digit growth, in local currency terms, over the 2018-2020 period.
In 2019, the Ukrainian medical device market was worth $524.7 million, and is projected to reach $549.6 million in 2020 (Source: National Sources/BMI). Multiple factors are driving the growth: new healthcare legislation, which changes the way healthcare is financed; comprehensive reforms in the hospital sector; an ongoing World Bank project that was approved in March 2015; and Ministry of Health plans to expand the network of clinics in rural areas.
In 2019, imports accounted for 90 percent of medical device sales in Ukraine. Major suppliers were China, the U.S., Germany, and Japan. The U.S. share was about 12 percent of total imports, and almost 25 percent of orthopedics and prosthetics imports.
Though Ukraine has a strong scientific research base capable of developing highly advanced treatments and products, it lacks an accompanying strong manufacturing sector. Domestic manufacturers produce a limited range of equipment including radiology, electrocardiography and ultrasound machinery, refrigeration and cryogenic equipment, specialized medical furniture, orthopedic appliances, respiratory anesthetic equipment, hearing aids, surgery and dentistry tools, sterilizing equipment, electro-diagnostic equipment, and electrical stimulators.
About 250 companies are developing and producing medical equipment in Ukraine. Domestic medical device production was worth over $95 million in 2019. Historically, exports tended to be largely at the lower end of the technology scale, but in 2018, diagnostic imaging exports accounted for nearly 40 percent of the total. Around half of exports are destined for other former Soviet countries.
Ukraine continues to move towards harmonization with European standards in the field of medical equipment/devices. In July 2015, a national conformity assessment procedure governing the registration of medical devices was introduced. New products can enter the Ukrainian medical device market if they conform with the technical regulations that based on the EU Directives for medical devices. The new system introduces the following requirements for Ukrainian medical device registrations:
- Foreign registrants must appoint Authorized Representatives based in Ukraine
- Expanded list of documentation and sample submissions required for registrations
- Manufacturing site inspections for Classes I, IIa, IIb and III
- Special symbols of national conformity are required for medical devices imported into Ukraine
- National conformity certifications are valid for five years
Leading Sub-Sectors
Diagnostic imaging equipment (ultrasound, computer tomography, magnetic-resonance tomography)- Laser surgery devices
- Stents, pacemakers, and other equipment used in the treatment of heart conditions
- Orthopedics and prosthetics
Opportunities
Ukraine’s implementation of e-procurement system in August 2016 presents opportunities for American companies to participate in Ukrainian public tenders. American suppliers interested in current public procurement opportunities in Ukraine may register for notifications at the Ukrainian Public Procurements Official National Web Portal PROZORRO and at PROZORRO.The World Bank’s $261 million “Serving People, Improving Health” project approved in March 2015 runs until September 2020. The project provides financing for medical infrastructure aimed at the prevention, early detection, and treatment of cardiovascular diseases and cancer in eight regions across the country. The project will also finance activities clustered around five thematic areas: payment system reform, e-Health, public health, information and communications, and capacity building.
Web Resources
Trade Events- Public Health, Ukraine’s major medical equipment & pharmaceutical industries trade show – October 1-3, 2019, Kyiv, Ukraine
(total market size = (total local production + imports) - exports)
Data Source: Naftogas Ukraine, Gas traders of Ukraine Association
*There is no accurate statistical data on the size of the oil & gas machinery equipment market.
The Government of Ukraine (GOU) considers the oil and gas industry as a strategic sector to achieve independence from foreign oil and gas imports. Since the Revolution of Dignity in 2014, Ukraine has taken necessary steps to diversify fuel supplies, improve the output and production of electricity, oil, and natural gas, all efforts aimed at increased energy independence. Ukraine continues to follow its path to energy security and independence though legislative reforms. In 2017, the GOU finally reduced the royalty rates for gas exploration to 12 % (from 28%) for wells up to 5,000 meters and to 6% (from 14%) for deeper wells. This makes Ukraine’s royalty tax one of the lowest in the EU.
The Ukrainian Government adopted a Concept for Development of Ukrainian Gas Production Industry. According to this concept, Ukraine should increase gas production to 27 bcm by 2020, a 23% increase. There is a great opportunity for U.S. companies to play a significant role in achieving this 27 bcm goal by supplying new equipment, technology, and best practices to help Ukraine achieve its ambitious target. Oil and Gas Production - Ukraine has tremendous natural resources for ensuring domestic needs in energy resources, with estimates of approximately 900 billion cubic meters of proven reserves of natural gas. In Europe, Ukraine ranks # 2 in Europe for gas reserves. Three Ukrainian regions contain hydrocarbons resources: the Dnipro-Donetsk basin, the Carpathian region in western Ukraine, and the Black Sea and Crimea region in the south. The Dnipro-Donetsk basin is a major oil and gas producing region accounting for 90 percent of all current Ukrainian production. The structure of hydrocarbons production in Ukraine is following: natural gas 89 percent, oil 7.9 percent, and gas condensate 3.1 percent. The primary source of hydrocarbons in Ukraine is natural gas, though the most lucrative gas reserves are located below 5,000 meters. Gas imports cover lapses in domestic production. For 2017, Ukraine consumed a total of 31.9 bcm of natural gas, of which 11.1 bcm is supplied via reverse flow from the European Union.
The leading position in gas production in Ukraine belongs to the state-owned companies, namely: PJSC Ukrgasvydobuvannya, PJSC Ukrnafta – accounting for 74 percent and five percent of production respectively. Six major Ukrainian private companies produce 18% and the remaining 3% of gas production comes from 45 small private gas producers. Overall, for 2016 the breakdown of gas production in Ukraine in bcm is as follows: PJSC Ukrgasvydobuvannya – 15.3 bcm, PJSC Ukrnafta – 1.1 bcm, and private companies 4.4 bcm.
Oil & Gas Machinery - Boosting domestic oil and gas production will require Ukrainian companies to upgrade their obsoleted drilling fleet and improve oil and gas services. The exact market size for oil and gas equipment is unknown. Though, following results from an industry survey that CS Kyiv conducted and available data from open sources, there are approximately 150 drilling rigs with different lifting capacity in Ukraine and around 75 percent of them obsolete. For example, there are only five drilling rigs with Top Drive systems in Ukraine. There are around 5,000 drilled producing wells in Ukraine and approximately the same number of depleted/sealed wells. By providing well workovers and utilizing new enhancement technologies, the Ukrainian oil and gas industry can recover at least 1,000 of the wells.
Primary market obstacles in Ukraine’s oil and gas sector include currency devaluation, customs clearance problems, delays in reforms (permit system and licensing). Although there is a sufficient number of potential local partners and subcontractors in oil and gas industry, the lack of a qualified and well-experienced workforce is also a major hindrance.
Leading Sub-Sectors
E&P services:
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Drilling Works
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Wells workover operations
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Technical upgrade of capabilities
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3D seismic, deposits development and geological exploration works
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Hydraulic fracture works
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Drilling bits service support
Oil & Machinery
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Mobile workover rigs with 125 ton and 180 ton lifting capacity
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Casing pipes for wells, oilwell tubing/drilling tubing
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Drilling muds and related services
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Downhole drilling motor and services
Opportunities - Several reform measures by the GOU are creating opportunities for renewed production and exploration in 2018-2019. Most notably, these include the steps towards deregulation of the oil and gas sector including the Law on the Natural Gas Market, which was adopted in October 2015. The law established legal and organizational rules for how the gas market should function, provides for gas market de-monopolization, offers consumer protection and enables consumers to freely choose their gas supplier.
Web Resources
Ministry Energy and Coal Industry of Ukraine: http://mpe.kmu.gov.ua/fuel/control/uk/index
Naftogaz Ukrainy National JCS: http://www.naftogaz.com/www/3/nakweben.nsf/
Ukrgasvydobuvannya PJSC http://ugv.com.ua/en/
Ukrtransnafta National Joint-Stock Company: http://www.ukrtransnafta.com/en/
Ukrnafta Open Joint-Stock Company: http://nadraukrayny.com.ua/?lang=en
Oil Market Magazine: http://www.oilmarket-magazine.com/eng/index.phtml