On March 28, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Improvement of Legislation in the Field of Subsoil Use” (Law No. 2805-IX dated December 1, 2022), which carried out a comprehensive reform of the subsoil use industry, entered into force. In this regard, many projects necessary for the full implementation of the provisions of the mentioned Law are currently being developed and discussed. In addition, other amendments to the Procedure for holding auctions for the sale of special permits for the use of subsoil were recently adopted. The Pragma Consulting Group, a partner of the UBA’s GR Committee, provides details with regard to these changes in its review.

Amendments to the Procedure for conducting auctions for the sale of special permits for subsoil use

Regardless of the changes made to the Procedure for conducting auctions for the sale of special subsoil use permits by Resolution of the Cabinet of Ministers of Ukraine
No 836 of 26.07.2022, the problem of disrupting auctions by setting a too high purchase price by the winner with subsequent refusal to pay was still relevant.

In view of this, the Cabinet of Ministers of Ukraine adopted Resolution No. 247 dated March 21, 2023, which additionally increases the amount of guarantee fees paid for participation in the auction: 20 percent, but not less than UAH 10 million for minerals that are of strategic importance for the sustainable development of the economy and the state's defense capability, UAH 20 million for hydrocarbons, UAH 2 million for deposits and/or subsoil areas containing sand, and UAH 1 million for other minerals, except for underground water.

At the same time, it is assumed that in the event of a re-auction, the minimum amount of the guarantee fee increases - for the first re-auction by two times, for the second re-auction - by five times, by 15 times - for each subsequent re-auction.

Entry into force of Law No. 2805-IX and draft by-laws aimed at its implementation

In view of the fact that the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Improvement of Legislation in the Field of Subsoil Use” (Law No. 2805-IX dated December 1, 2022) entered into force on March 28, by-laws aimed at its implementation are expected to be adopted in the near future, namely:

• Draft Resolution of the Cabinet of Ministers of Ukraine “On the approval of a special permit for the use of subsoils, the maximum economically justified terms of performance of works on the subsoil area (taking into account geological features), the main types of work and application forms in the field of geological study and rational use of subsoils”, aimed at the approval of documents at the sub-legal level in accordance with Law No. 2805-IX;
• Draft Resolution of the Cabinet of Ministers of Ukraine “On Amendments to Certain Resolutions of the Cabinet of Ministers of Ukraine Regarding the Use of Subsoil”, aimed at bringing by-laws operating in the field of subsoil use into compliance with the provisions of Law No. 2805-IX;
• Draft Resolution of the Cabinet of Ministers of Ukraine “On approval of the Procedure for maintaining, functioning and accessing information of the unified state electronic geo-information system for the use of subsoil”, which regulates the operation of the geo-information system, the creation of which is provided for by Law 2805-IX. Related to this project is the Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of the Procedure for Maintaining the State Register of Special Subsoil Use Permits”,  the Draft Resolution of the Cabinet of Ministers of Ukraine “On Approval of the Procedure for Maintaining the State Register of Oil and Gas Wells”,  the Draft Resolution of the Cabinet of Ministers of Ukraine “On the approval of the Procedure for maintaining the State Register of Artesian Wells”, since the specified registers are parts of the mentioned system;
• The draft order of the Ministry of Environmental Protection and Natural Resources of Ukraine “On approval of the electronic cabinet of the subsoil user”, the work of which is also necessary for the full implementation of the provisions of Law No. 2805-IX.

On March 28, 2023, the order of the Ministry of Environment and Natural Resources No. 176 approved the model agreements on the conditions of subsoil use.

In addition, on March 24, 2023, the Cabinet of Ministers of Ukraine adopted Resolution No. 260, which amended the Regulation on the Ministry of Energy of Ukraine with the aim of bringing it into line with Law No. 2805-IX, in particular, excluding the authority of the Ministry to ensure the organization and conduct of auctions from sale of oil, gas condensate and liquefied gas, as well as the resolution of the Cabinet of Ministers of Ukraine dated 16.10.2014 N 570 "On the organization and holding of stock exchange auctions for the sale of crude oil, gas condensate of own production and liquefied gas" and the government resolution about making changes to it.

Proposed changes to the Code of Administrative Procedure of Ukraine

Among other novelties in the field of subsoil use, introduced by Law No. 2805-IX, an updated approach to the suspension and cancellation of special permits for the use of subsoil holds an important place - namely, the introduction of judicial procedures in the specified cases. Accordingly, changes to the Code of Administrative Procedure of Ukraine are also being prepared for submission to the parliament in order to provide for a special procedure for the consideration of the relevant category of cases. Among other things, it is proposed to provide for the possibility of immediate execution of the court decision in the mentioned categories of cases.