Recent Changes To Production Sharing Agreements Law

Over the past few months the Ukrainian Parliament has made two important changes to the legislative framework governing production sharing agreements for exploration and extraction of minerals. These amendments have been primarily introduced into the Law of Ukraine "On Production Sharing Agreements" (the "PSA" and "PSA Law").

The first amendment, which came into effect on 17 November 2011, has eliminated the requirement that an area of the investor's interest be included in a special list of subsoil areas eligible for production sharing tenders before any such tender could be initiated.

The second amendment, which came into effect on 11 December 2011, provides that the conditions of a PSA tender may actually require and oblige investors to develop tendered subsoil areas jointly with a state-owned company, meaning that the latter will have to be included into a PSA as a separate party. In this case, a winner of the PSA tender would usually be chosen as an operator