The increase of natural gas extraction rent may damage investment in the industry.

In the case of the adoption of laws on newly increased rental rates for gas production, we might expect a shortage of domestic gas production, says EBA. Furthermore, the proposed increase in rates will increase the maximum cumulative share of taxes in the price to 75% for shallow wells and up to 64% for deep wells, which, according to gas companies, will lead to a complete cessation of investment in the industry and working capital deficits. As a result, Ukraine will have to re-import at least 3 billion m3 of gas over the next three years, which will cost almost UAH 100B (USD 3.6B) at current prices and exceed any short-term fiscal benefits from raising rates.