Реалізовано
The project “Promoting Corporate Social and Environmental Responsibility Standards in the Extractive Sector (National Level)” is implemented with the financial support of the International Renaissance Foundation.

Project Goal:
The goal of the project is to promote best democratic practices for implementing and prioritizing corporate social and environmental responsibility (CSER) programs in areas where hydrocarbon extraction takes place, taking into account additional revenues (and their losses) to local budgets in the form of a percentage of rent payments.

Термін реалізації:
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Про проєкт

Project Implementation

The implementation of the project will help develop approaches to corporate social and environmental responsibility that are clear and understandable to the general public, while also demonstrating the importance of constructive and well-reasoned dialogue.

A distinctive advantage in achieving the project’s goals and objectives is the involvement of all three key stakeholders—government, civil society, and business (extractive companies)—at every stage. This approach will enable decision-making through consensus, promote open dialogue, and increase overall interest in solving problems through joint efforts.


Project Objectives:

  • Engage extractive companies in the region in dialogue and participation in the development of extractive communities, taking into account the shortfall in rent payments for the use of subsoil resources (oil, natural gas, and gas condensate) to local budgets.

  • Develop a framework for determining the volume of social partnership funds for community development and environmental protection.

  • Promote best practices of responsible subsoil use and community partnership in the extractive sector.

  • Reduce the level of conflict surrounding gas extraction in Kharkiv Oblast.


Target Audience of the Project

The target audience includes energy policy experts, Members of the Verkhovna Rada of Ukraine, members of the Multi-Stakeholder Group for EITI implementation in Ukraine, and the leadership of extractive companies.

Every year, 5–7 conflict hotspots emerge across the region and develop rapidly. Currently, according to environmental impact assessments (EIA), tensions are rising around new drilling in the Babaivska, Merefianska, and Khoroshivska communities, as well as others in Kharkiv Raion, which will be the focus areas of the project.


Relevance of the Project

In recent years, an alarming trend has emerged: under the pretext of stimulating the industry and attracting investment, artificial conditions are created that enable private companies to earn windfall profits and siphon funds before they even reach the state budget. This severely undermines the economy and worsens both environmental and socio-economic conditions in extractive regions.

EITI (Extractive Industries Transparency Initiative) reports reveal the changing dynamics of rent payment rates for the use of subsoil for natural gas extraction. In 2014–2015, the rates were 28–55% for depths up to 5 km and 15–28% for deeper wells. In 2016, the rates were 29% and 14%, though they reached as high as 70% (until March 31, 2016) and 50% for gas sold to households. In 2017, the rates for household needs were equalized and fixed at 29% and 14%. Since 2018, incentivized rates have been introduced for new wells—12% and 6%, respectively. For Production Sharing Agreements (PSAs), the rent rate is fixed at only 1.25%. Before 2017, the PSA rent was determined by the agreement itself, but could not be lower than the national rate. In other words, the main tax on subsoil use has been reduced by nearly five times.

Such legislative initiatives have led to the escalation of conflicts between extractive companies and local communities, growing public outrage, and the breakdown of efforts to ensure Ukraine’s energy independence. In attempts to attract investors, the interests and voices of local residents have been overlooked, leading to misunderstandings, lack of communication, and growing conflicts fueled by economic uncertainty.

Новини

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  • 13 May 2025
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