One of the chief arguments of those who opposed Ukraine’s independence was the claim that this country lacks rich mineral resources, of which Russia has plenty. So, the argument went, if Ukraine broke away from the Soviet Union, it would lose a powerful raw-material base comprised not only of oil and gas but a whole range of fossil fuels.
The majority of Ukrainians — even staunch advocates of independence, including some well-informed, knowledgeable, and experienced individuals — readily accepted the myth created by Soviet propaganda that Ukraine’s earth is exhausted.
But is this the real situation? In geological terms, what is Ukraine’s territory like? Ukrinform’s observer Olena Pozdniakova posed this question to Dmytro HURSKY, chairman of the State Geological Service of Ukraine.
“In terms of quantity and quality of fossil fuel deposits, Ukraine occupies a stable first place in Europe: its territory represents 0.4 percent of the world’s land mass and a population comprising 0.72 percent of the world’s total. Our country accounts for about 5 percent of the worldwide extraction of mineral resources worth more than 20 billion US dollars a year. This includes mineral raw materials, semi-concentrates, concentrates, and products made from them.
“Out of the 120 varieties of mineral resources consumed by people today, Ukraine exploits 98. As for other varieties, deposits are being prepared for exploitation or prospecting.
“As estimated by the Ukrainian Academy of Sciences’ Council for the Study of Ukraine’s Productive Resources and other national institutions, the gross value of ready-to-exploit mineral resources hidden in the bowels of the earth is 7.5 trillion US dollars. The world’s top uranium-rich countries, such as Canada, the US, the Republic of South Africa, and Australia, estimate our reserves and resources at 11.5 trillion dollars. In clearer terms, this works out to approximately $220,000 of already surveyed reserves for every Ukrainian citizen, including newborns.
“Ukraine is tops in the world as far as deposits of many mineral resources are concerned. For example, we have about 7.8 percent of iron ore, 43.6 percent of manganese ore, about 20 percent of titanium ore reserves, and, to a smaller extent, zirconium and hafnium ores, etc. Ukraine is one of the world’s top ten uranium-rich countries.”
“How did the myth of Ukraine’s mineral deficiency come about?”
“The fact of the matter is that in Soviet times emphasis was placed on the so-called traditional mineral resources. In other words, the state budget provided funds for search and geological surveys of about 60 varieties of mineral resources. For some reason, Soviet geological policy prescribed that gold should be prospected in Siberia or near Magadan, diamonds in northern Yakutia, platinoids in the northern part of Krasnoyarsk Territory, and so on. As a result, Ukraine did not exactly fit in with the Union’s geological objectives. For instance, it was forbidden even to raise the question of prospecting for gold in Ukraine. Not a single penny was ever allotted for this.”
“Why were no funds allotted for gold prospecting? Why was this kind of policy pursued vis-a-vis Ukraine?”
“I can’t begin to judge this because the only policy I have dealt with for almost 42 years is called ‘mineral raw materials” of the country in which I was working. So I will answer your question this way: there was a time when large territories were fenced in by barbed wire. When I was very young, I ended up at one of the largest and most closely guarded uranium ore deposits, where 10,000 convicts and 18 of us young specialists worked.”
“Clearly, unpaid convict labor was an important pillar of the Soviet economy, so uranium, gold, and diamonds were being prospected for in faraway places where you didn’t need to pay wages to workers — a typical Soviet approach. But what about Ukrainian gold?”
“So far only one medium-sized gold deposit has been prepared in Muzhiyivske, Transcarpathia. It began to yield gold when it was commissioned in 1999.”
“How large are its gold reserves?”
“Only about 55 tons. But let’s compare the potential resources of Ukraine and, say, the Russian Federation, where I happened to work for a very long time in Siberia, the Far East, Chita and Irkutsk oblasts, my native Magadan oblast, and the Yakut region. Russia’s territory accounts for 17.8 percent of the world’s land mass, and its potential is estimated at 4,500 tons of gold, while Ukraine’s gold resources amount to 3,200 tons, with 0.4 percent of the world’s land mass. Is the comparison clear?
“A lot has been done in the years of independence to survey and begin exploiting gold deposits in Transcarpathia and the Donetsk massif. There are six deposits on the Ukrainian crystalline shield alone — Klyntsivske, Mayske, Yuryivske, Balka Zolota (‘Golden Gully’ — Ed.), Balka Shyroka, and Balka Serhiyivska, with total reserves of gold reaching 620 tons. We are searching for and trying to attract investors because we lack funds to prepare the deposit for exploitation.”
“Have geologists done a good job of exploring Ukraine? Is it true they have surveyed only four percent of its territory, as some media have reported?”
“Detailed geological maps are the best proof that the country has been surveyed well. I can say proudly that geological mapping is very well developed in Ukraine, which makes it possible to forecast, search for, and identify the deposit pattern of various mineral resources. Incidentally, in this field we surpass not only the CIS countries but Europe as a whole. The world’s leading geological services consider our maps to be brilliant. Ukraine’s geological map already shows more than 8,000 deposits of mineral wealth ready for exploitation and another 20,000 that are being surveyed.
“Over the years of independence, when we began to deal with the so-called non-traditional (for Ukraine) mineral resources, the map of Ukraine has marked hundreds of deposits of zinc, gold, platinoids, rare and rare-earth metals, other alloying metals, and copper. Incidentally, there was no copper in Ukraine until now: we still import it from Poland and some independent CIS countries. Meanwhile, the copper deposits that were discovered in Volyn and Podillia in the early 1990s are estimated at 25.6 million tons, while Ukraine’s current requirement is 200,000-230,000 tons. It will take time and financial effort, though, to prepare this deposit for exploitation.
“As for the percentage you mentioned, this may be a reference to Ukraine’s exclusive economic zone on the Black and Azov Sea shelves. This area has been explored quite extensively, but its deposits of oil, gas, and gas condensate have not been adequately surveyed, and only four percent of the resources are ready for exploitation.”
“Is it true that Ukraine was the Soviet Union’s main supplier of gas and oil before the 1970s, and can we say that our capacities in this field are now exhausted?”
“We can’t avoid figures here. In the banner year of 1976, Ukrainian gas producers extracted 76.8 billion cubic meters of gas, i.e., more than required for domestic use. This gas was delivered to the entire European part of the USSR, including the Baltic republics, Belarus, and, naturally, Russia. Ukraine used to produce 15.4 million tons of oil — precisely the amount needed to ensure this country’s economic security today. This scale of production was possible owing to extensive geological surveying: test drilling of oil and gas deep wells alone was done at the rate of 650-670 linear meters a year. But later, the Ukrainian gas and oil complex was simply stripped of investments, which put an end to regular geological surveying. Today, test drilling is being done at an estimated 200,000 linear meters a year; until recently, it was a mere 50,000 meters. Can a pace like this really promote the country’s mineral and raw-material complex?
“Now about exhaustible gas horizons: on our advice, the government of Ukraine recently invited international bids to exploit the Prykerchenske offshore area, which occupies an area of 12,960sq km and is between 70 and 2,000 meters deep. This is an area where we cannot work with our equipment and technology, which are hardly modern. The tender was won by Vanco International, one of Europe’s largest companies. Ukrainian and foreign oil and gas experts estimate that Prykerchenske alone can yield at least 300 billion cu. m. and, at most, up to 3 trillion cu. m.
“After the bidding was over, our geologists discovered a new oil deposit, just next to this gas area, estimated at 100 million tons. So we are happy that our optimistic forecasts have come true.”
“Will Ukraine be able to supply itself with its own energy resources?”
“This is a thorny question because it involves a lot of aspects. What do we have? According to government statistics, the reserves now under exploitation represent 1.3 trillion tons of natural gas, about 150 million tons of oil, and about 112 million tons of gas condensate. The potential resources of gas and oil are also significant. But the efforts of prospectors and geologists alone are insufficient to solve the serious problem of this country’s energy security.
“The government should pursue a clear-cut mineral reserves and economic policy. Domestic fuel requirements could be fully met if outdated technology and power-consuming equipment were scrapped and replaced with energy-saving technologies in gas and oil production, as well as in other sectors of the Ukrainian economy.”
“Some people predict that the wars of the future will be waged for drinkable water, not oil.”
“Clear, artesian, subterranean water is increasingly becoming the world’s No. 1 mineral. Ukraine’s hydrogeologists have done their best to provide this country with pollution-free, drinkable water. If we accept the Ukrainian potential of surveyed resources of clean water at 100 percent, the current nationwide utilization of these resources varies from 8 to 18 percent in the regions. At the same time, the utilization of this precious mineral is far from ideal. To drink ecologically pure, safe water, we should allocate funds and implement new equipment and water-saving technologies. Instead, we still do not have a clear-cut state economic policy of utilizing underground waters that are ecologically pure and safe.”
“What about mineral waters? Is Ukraine well stocked?”
“You know, for more than 30 years I worked only in the field, but geologists use the word ‘field’ to describe mountains, the tundra, deserts, swamps, and steppes. I have prospected for minerals in the Kalahari and Sahara deserts, in the Atlas Mountains, Siberia, and the Far East — there’s hardly a place I haven’t been to. So I don’t know any other country that is as rich in every well-known variety of mineral water as Ukraine. Every day the media advertise a few famous mineral spring spas, but this is a drop in the ocean of salubrious water that nature bestowed on our country. And it is a crime not to use it to improve our nation’s health. But, again, the situation here leaves much to be desired. There are many things to do.”
“We have discussed earth, water, and fire (i.e., oil and gas), which are the most important spheres of geological activity. And now, let’s talk about money. When Ukraine became independent, the field of geology faced the necessity of adopting new economic methods of managing mineral resources and a new system of funding geological surveys. Has there been any success here? From what sources is this sector being financed?”
“Let me tell you that geology paid for itself a long time ago. The sector is being financed from a special state budget fund that receives allocations from businesses as payment for surveys that geologists have completed on behalf of the state. Every deposit of one mineral raw material or another is valued from hundreds of millions of hryvnias to many billions and trillions. Every ton of extracted iron ore or oil, every gram of gold represents payments for previous geological surveys. These are the funds with which geologists are further developing Ukraine’s mineral and raw-material base.
“But if we lived off these funds alone, geology would disappear as a profession. In 1991, the year the Soviet Union collapsed, the sector was financed at a level equivalent today to UAH 945 million. Conversely, in 1999 the sector received ‘a shot in the arm’: UAH 76 million. Of course, we have been searching for contract work as well as domestic and foreign investors. By doing so, we have maintained a constantly functioning, mobile, and highly skilled state-run geological service of Ukraine, which in turn has helped maintain and develop Ukraine’s mineral and raw-material base.
“The year 2000 was a turning point. The Yushchenko cabinet settled its accounts with geologists: it cleared UAH 25.6-million in wage arrears to people who had been eking out an existence. A total of UAH 286 million was earmarked for the development of the mineral and raw-material base. This year’s state budget provides UAH 821 million for the sector, but now, eight months into the year, we have been financed at a mere 39.6 percent. It is extremely doubtful that the country’s mineral and raw-material base will develop in these conditions.
“Now, about other sources of funding. First of all, we are doing a considerable amount of contract work, cooperating with domestic and foreign investors to extract various mineral resources. We are constantly formulating strategically important economic projects, for which, I hope, international bids will be invited. Under the Constitution and the Mineral Resources Code, the earth’s interior belongs to the people of Ukraine, but it can be leased through a system of auctions. The highest bidder will receive special permission to exploit mineral deposits for up to 20 years.”
“What are geologists offering for auction?”
“Eighteen licenses for geological surveys and exploitation of deposits were sold at last May’s auction, including twelve special permits to extract titanium ore, coal, granite, sand, quartz sand, quicklime, flux lime, and peat, as well as six licenses for geological surveys and the experimental and commercial development of mineral deposits, such as titanium ores, oil, gas, etc. The auction netted a total of UAH 15,722,000. This practice is still in its infancy, though.
“But things do not always go smoothly: the rules of the game change every year, and this scares off both national and foreign investors. We are drawing up a law ‘On Leasing the Earth’s Interior and Deposits of Mineral Resources.’ I hope the current Verkhovna Rada passes this law, as it will create proper conditions for those who would like to work fruitfully with the earth, search for new deposits and develop already surveyed ones — in other words, to do a noble cause. Incidentally, this job also pays very well. Worldwide experience shows that one imaginary monetary unit invested in mineral resources generates six to ten monetary units in terms of mineral and raw-material output. This is the golden rule. Over the past six years (2000-2006), the state budget has invested UAH 1.79 billion to develop Ukraine’s mineral and raw-material base, and received minerals and raw materials worth UAH 141.2 billion. The golden rule of geology also applies to our lands.”
