CAPITAL: Kiev

MONETARY UNIT: Hryvna

REFINING CAPACITY: 1,085,132 b/cd

OIL PRODUCTION: 47,000 b/d

OIL RESERVES: 395 million bbl

GAS RESERVES: 39.6 tcf

Independent petroleum firms were showing increasing interest in oil exploration and development projects in Ukraine. Projects included oil, gas, and coalbed methane development schemes.

Odessa Petroleum Corp., Vancouver, B.C., acquired an 80% interest in the Belolessky block in southwestern Ukraine. The company started drilling in the East Sarata-Yaroslav prospect on the block and gathering data on wells drilled under the old Soviet system.

Odessa Petroleum agreed to acquire an 80% interest in Belolessky block from Tintex Capital Ltd., Calgary. Under the agreement, Odessa would pay Tintex $3.3 million in 1998 and $2.4 million in 1999. In October 1998, however, Odessa renegotiated the deal. The new agreement called for a single cash payment of $500,000 in 1999. Odessa was to pay the remainder of the $5.2 million selling price by awarding Tintex 10% of the net profits from production of oil from East Sarata. The payments were to begin after payout of project investment costs.

Odessa held a 55% working interest in Belolessky-a 900 sq km block in southwestern Ukraine. The company could increase its working interest to as much as 80%.

Data on East Sarata and Yaroslav prospects were sketchy, as were data on many discoveries made under the Soviet system. Two wells-ES-1 and ES-2-were drilled before Odessa purchased a stake in the block.

Odessa said the Soviet Union collected 4,000 line-km of seismic surveys and drilled 26 deep wells on the block.

A third well, ES-3, had been drilled, flowing oil at the rate of 450 b/d during initial production tests.

Odessa Petroleum said East Sarata-Yaroslav oil field had combined proved and probable reserves of 23.4 million bbl, with an upside potential of 44.1 million bbl.

The Ukrainian State Geological Reserves Committee recognized oil in place of 167 million bbl in East Sarata oil field, said Odessa. "In addition, 24 million bbl of oil in place have been assigned to the Zheltoyar well to the south of East Sarata."

Odessa`s plans included additional drilling and a 3D seismic program.

Odyssey Petroleum Corp., Calgary, terminated an agreement with Calgary`s Trident (88) Exploration Ltd. regarding negotiation rights in Ukraine`s Dolina oil field but planned to continue pursuing the project by other means.

Trident (88) was to transfer to Odyssey its rights to negotiate an exploration and development agreement with Ukrainian national oil company Ukrnafta for Dolina oil field in western Ukraine.

Odyssey during 1998 was negotiating directly with Ukrnafta. The company hoped to strike a joint venture agreement covering the entire Dolina region.

Elsewhere, Houston`s CBM Energy Ltd. embarked on a 5-year coalbed methane exploration and development project in eastern Ukraine`s Donetsk coal basin, where it held five license blocks.

The company signed a joint venture agreement with joint-stock coal companies DonUgol and MakeevUgol and with state geological exploration company Donbassgeologiya.

CBM Energy and its partners planned a three-stage project to gasify and produce coalbed methane from the blocks:

- Evaluation and pilot project (up to 5 years).

- Development (5 years).

- Commercial degasification and production (at least 20 years).

CBM Energy planned to invest $25-30 million during Stage 1. Total investment over the life of the project was to exceed $350 million.

Initial production of 290-483 MMcfd was targeted.