On 30 July 2026, Draft Law No. 15454 on Amendments to Certain Legislative Acts of Ukraine to Improve the Mechanisms for Granting and Exercising Subsoil Use Rights through Auctions (Electronic Bidding) and under Production Sharing Agreements was registered (the "Draft Law"). On 17 August 2026, Draft Law No. 15454-1 was registered as an alternative to Draft Law No. 15454. It retains the core concept and most of the proposed mechanisms, while addressing certain shortcomings, clarifying a number of provisions and supplementing the proposed framework with new mechanisms (the "Alternative Draft Law").
The Draft Law proposes comprehensive changes to the regulation of subsoil use, including the granting of special permits and the conclusion and implementation of production sharing agreements ("PSAs"). Some of the proposed changes had already been discussed in the context of Draft Laws Nos. 14249 and 14250, while Draft Law No. 15454 also contains a number of new provisions.
The proposed changes include, in particular, reshaping the PSA framework to facilitate its broader use, including for solid mineral mining projects, allowing an auction for a special permit to proceed with a single participant, introducing new requirements for PSA tenders, and increasing the transparency of the Interagency Commission on the Organisation of the Conclusion and Implementation of Production Sharing Agreements (the "Interagency Commission"). The Draft Law also provides for the allocation of liability among investors for the performance of a PSA and introduces new rules on stabilisation guarantees, among other changes. Below we discuss the most important developments and their practical implications.
Stabilisation Guarantee
The Draft Law proposes to supplement the Subsoil Code of Ukraine with Article 25-1, under which special permits, agreements on the terms of subsoil use and PSAs concerning strategic, critical and oil-and-gas-bearing subsoil areas would be governed by the legislation in force on the date the relevant special permit was granted. Subsequent legislative changes would apply only where they improve the position of the subsoil user.
The stabilisation guarantee would not apply to legislative changes relating to defence, national security, public order, environmental protection or taxation.
At present, stabilisation in the subsoil sector is provided only for production sharing agreements. Article 27 of the PSA Law provides that a PSA is governed by the legislation in force on the date the agreement is concluded. The exceptions to stabilisation concern defence, national security, public order and environmental protection. The taxation of PSA investors is governed by special provisions of the Tax Code of Ukraine. Article 340 of the Tax Code specifically provides for tax stabilisation: the investor's rights and obligations are governed by the tax legislation in force on the date the PSA is concluded, except for amendments that reduce or abolish taxes (Section XVIII).
Because the proposed amendments to the Subsoil Code would extend stabilisation to PSAs as well, an inconsistency arises with the existing Article 27 of the PSA Law and Article 340 of the Tax Code of Ukraine, which the Draft Law does not propose to amend. As a result, two stabilisation regimes could potentially apply to the same PSA project: one under the Subsoil Code and another under the PSA Law. They differ, in particular, as to the reference date for the stabilisation guarantee and the scope of the exceptions. The PSA Law links stabilisation to the date the PSA is concluded, whereas the proposed Subsoil Code provision links it to the date the special permit is granted. In addition, the Code expressly excludes changes to tax legislation from the guarantee, while Article 27 of the PSA Law contains no such separate exclusion.
The Alternative Draft Law resolves this inconsistency: the proposed Article 25-1 of the Subsoil Code would not apply to PSAs, which would remain subject to a separate stabilisation regime. In addition, tax legislation is not included among the exceptions to stabilisation. The Alternative Draft Law also extends the guarantee to special permits issued before the law enters into force, with effect from the date of its entry into force; specifies the types of changes considered to improve the position of the subsoil user, including reductions or abolition of taxes or fees, simplification of regulation, relaxation of state supervision or liability; and additionally guarantees the non-application of secondary legislation that restricts rights granted under a special permit.
The Alternative Draft Law provides a significantly more coherent approach to stabilisation. It removes the inconsistency with the separate stabilisation regime applicable to PSAs and, at the same time, strengthens the guarantees available to holders of special permits, as the proposed stabilisation would also extend to changes in tax legislation.
At this stage, however, it is not possible to determine with certainty which approach will ultimately be reflected in the final version of the law. The main and alternative draft laws are being considered in parallel, and the Verkhovna Rada may adopt either draft as the basis for further legislative consideration or further revise the proposed provisions during the legislative process. Regardless of which version is ultimately adopted, it is advisable to expressly record the scope of the stabilisation guarantees in the PSA itself.
Ability to Share Purified, Beneficiated or Processed Output
This is one of the most anticipated amendments to the PSA Law in the context of extending the PSA framework to solid mineral mining projects. The need for such legislative regulation was envisaged in the Government's Priority Action Plan for 2025 and subsequently in the corresponding Plan for 2026.
The current PSA Law was designed largely with oil and gas projects in mind. The definition of "produced output", which is the basic category used to determine cost recovery and profit production and their subsequent sharing between the State and the investor, currently covers output extracted under a PSA and delivered to the measurement point. For solid mineral projects, this approach may be insufficient because a significant part of the economic value of the raw material is created at the stages of purification, beneficiation or further processing.
The Draft Law proposes to broaden the definition of "produced output". Under the proposed wording, it would mean the total volume of output extracted (produced) under a PSA and delivered to the measurement point and, where the PSA so provides, also purified, beneficiated and/or processed output delivered to the measurement point. Accordingly, if expressly provided for in the PSA, not only the primary extracted raw material but also output resulting from its purification, beneficiation or further processing could be subject to sharing. It should also be noted that the definition of "produced output" is duplicated in subparagraph 14.1.28 of the Tax Code of Ukraine, while the Draft Law does not amend the Tax Code. As long as these two definitions diverge, beneficiated or processed output may be characterised differently for PSA and tax purposes.
Multiple Subsoil Areas and Associated Minerals under a Single PSA
Part five of Article 6 of the current PSA Law already permits a PSA to be concluded without a tender on the basis of several special permits and/or in respect of several subsoil areas, regardless of whether they are adjacent or separate and without requiring them to belong to the same deposit. Both draft laws extend the possibility of concluding a single PSA in respect of several subsoil areas to tender-based PSAs, while requiring such areas to be located within the same deposit or within deposits of the same mineral. In addition, a PSA could be concluded without a tender in respect of part of a subsoil area already granted to the subsoil user after the reserves have been allocated between the relevant areas and special permits have been obtained following such allocation.
Separately, the Draft Law provides for the possibility of including associated minerals and components in the production subject to a PSA where they are extracted or recovered in the course of implementing the principal project.
Taken together, these changes broaden the structuring options available for complex mining projects in which development of a deposit is not limited to a single subsoil area. At the same time, implementing this approach in practice may be complex and will require detailed regulation in the PSA, including rules for accounting for and valuing different types of output and for sharing them between the State and the investor.
Allocation of Liability among Investors
The current PSA Law provides for joint and several liability of investors for obligations under the agreement. The Draft Law would allow the parties to depart from this rule: as a general rule, investors would continue to be jointly and severally liable for the performance of obligations under a PSA, but the agreement could provide that each investor is responsible for a specified part of the obligations.
This would provide greater flexibility in structuring multi-party projects and consortia, where individual participants may perform different functions or be responsible for separate parts of the project. At the same time, this model is more complex from the State's perspective: if an obligation is not performed, it may be necessary to determine which investor the relevant claim should be brought against. PSA terms should therefore delineate each investor's obligations and areas of responsibility as clearly as possible.
PSA Tender
The Draft Law provides more detailed rules for conducting PSA tenders, including requirements for tender documentation, the contents of tender bids and the criteria for their evaluation. Some of these requirements have already been applied in practice and included in the terms of individual tenders, but they are now proposed to be expressly incorporated into the PSA Law.
In particular, the Cabinet of Ministers' decision to launch a tender and the tender documentation would have to specify the evaluation criteria and the number of points available under each criterion. The required content of a tender bid is also elaborated: in addition to information on the participant's experience, technical and financial capacity, work programme and investments, the bid would include proposals concerning cost recovery and profit production. The Draft Law also introduces a criterion relating to the use of Ukrainian personnel, goods, works and services of Ukrainian origin. The Alternative Draft Law additionally increases the minimum period for submission of tender bids from one to three months.
A minimum threshold is also introduced for a tender to be deemed to have taken place: if the winner receives less than half of the total number of points available under the specified criteria, the tender would be deemed not to have taken place. For potential participants, this means greater predictability, as the basic requirements and criteria would be uniform across all tenders.
Transparency of the Winner Selection Process
The Draft Law strengthens transparency requirements for PSA tenders. Unlike the current framework, which provides for publication of information on tender results, the proposed rules would make the key stages of the tender process public.
In particular, minutes of Interagency Commission meetings concerning the announcement of the tender, registration of bids and admission of participants would be published. The Interagency Commission's decision setting out its conclusions and recommendations regarding the selection of the winner would also have to list the participants admitted to the tender and the number of points awarded to each participant under each evaluation criterion, and would be published on the website. Under the Alternative Draft Law, the minutes would be published within five business days after the relevant meeting, while the decision containing the scores would be published simultaneously with the decision determining the winner.
Accordingly, not only the identity of the selected winner but also key elements of the selection process would be made public, including the list of participants, the results of the admission process and the evaluation of tender bids. This would increase the transparency of the process and make it possible to trace how the tender outcome was reached.
Reservation of a Subsoil Area for a PSA Tender
The Draft Law introduces a mechanism for reserving a subsoil area for a PSA tender. Once the Interagency Commission decides that holding a tender is appropriate, the relevant subsoil area is reserved and may not be granted for use on other grounds while the relevant procedure is ongoing.
The reservation would terminate, in particular, if the Cabinet of Ministers does not decide to launch the tender within six months, if the tender is deemed not to have taken place, or if the PSA is not concluded within the prescribed period. This mechanism protects the initiator of the tender from parallel applications for the same subsoil area, while effectively removing the area from availability for the duration of the procedure.
New Rules for Transition to a PSA without a Tender
The Draft Law retains the possibility of concluding a PSA without a tender with a subsoil user that holds a special permit, but introduces additional preconditions for using this mechanism.
For a holder of a special permit for geological exploration with subsequent extraction, this would be possible after completion of prospecting and exploration works and preparation of the deposit for commercial development; for a holder of an extraction permit, after preparation of the deposit for commercial development. In both cases, an environmental impact assessment conclusion would also be required. In addition, at least one of the conditions specified in part two of Article 6 of the PSA Law, as proposed by the Draft Law, must be present: the need to use high-cost or advanced technologies, development of deposits under complex conditions, or further exploration.
It is also proposed that the procedure for the Interagency Commission's review of an application to conclude a PSA without a tender be approved by the Cabinet of Ministers of Ukraine.
In addition, for a PSA concluded without a tender on the basis of an existing special permit, the Draft Law requires application of the general taxation regime. In such a case, the investor would not be able to benefit from the special PSA tax regime provided by the Tax Code of Ukraine. In practice, the tax factor may prove decisive when choosing between transitioning to a PSA and retaining the ordinary operating model under a special permit.
Alternative Draft Law No. 15454-1 significantly simplifies the conditions for an existing subsoil user to transition to a PSA without a tender. It does not contain the additional requirements in Draft Law No. 15454 concerning completion of the relevant exploration stages and preparation of the deposit, or obtaining an environmental impact assessment conclusion. To initiate the conclusion of a PSA, it is sufficient that at least one of the statutory grounds exists, relating to the need to use high-cost or advanced technologies, development of deposits under complex conditions, or further exploration. The Alternative Draft Law therefore substantially lowers the threshold for an existing subsoil user to transition to the PSA regime.
Importantly, the Alternative Draft Law does not require the general taxation regime to apply to PSAs concluded without a tender on the basis of an existing special permit. This removes one of the most significant restrictions proposed by Draft Law No. 15454 and makes the transition to a PSA considerably more attractive for existing subsoil users.
The Alternative Draft Law also sets out a detailed procedure for reissuing a special permit after a PSA has been concluded. Importantly, previously issued permits, approvals and land title or land-use documents would remain valid after the PSA is concluded, and the subsoil user would retain the right to carry out works under the existing permit while the application is being reviewed and negotiations are ongoing.
At present, it is not possible to determine which of the two draft laws will be adopted by the Verkhovna Rada as the basis and which provisions will ultimately be included in the final law. At the same time, both drafts move towards more detailed regulation of the transition of an existing subsoil user to a PSA without a tender. Therefore, regardless of which of the proposed approaches is ultimately supported, the procedure should become more formalised and predictable for subsoil users.
Treatment of Property upon Termination of a PSA
The Draft Law provides more detailed rules for the transfer of property created or acquired by the investor for the performance of a PSA where, at the time the agreement terminates, the value of that property has not been fully reimbursed through cost recovery production.
The State would acquire such property only after paying the investor the unreimbursed portion of its value. The payment must be made no later than six months after termination of the PSA. At the same time, the investor would be able to retain ownership of the property by repaying to the State the portion of its value that had already been reimbursed. If the property remains with the investor, the investor would be entitled to continue operating it and to obtain the permits required for that purpose.
It is also proposed that the legal regime applicable to property created or acquired before the conclusion of a no-tender PSA on the basis of an existing special permit be determined by the terms of the relevant PSA.
At present, the PSA Law provides that title to property transfers to the State when the value of the property has been fully reimbursed through cost recovery production or, upon termination of the PSA, on the terms and in the manner provided by the agreement. The Law does not establish a separate mechanism for cases where the property has been only partially reimbursed when the PSA terminates.
Suspension of Subsoil Use Rights under a PSA: by Court Order and Only within the Affected Part of the Subsoil Area
The Draft Law changes the procedure for restricting, suspending and terminating subsoil use rights under a PSA where an immediate threat to human life or health or to the environment arises. The Cabinet of Ministers would no longer be able to make the relevant decision itself and would instead have to apply to a court for an order restricting, suspending or terminating the subsoil use right.
The court order would have to apply only to the part of the subsoil area in which the relevant threat has arisen. The Draft Law therefore limits the measure territorially and prevents a restriction, suspension or termination from automatically extending to the entire subsoil area where the relevant grounds concern only part of it. At the same time, court proceedings take time, which may be critical in cases involving an immediate threat to human life or health; the effectiveness of the mechanism will therefore depend to a significant extent on how promptly courts consider such applications.
International Arbitration
The Draft Law expressly permits disputes to be referred to international commercial arbitration. If the parties to a PSA agree on international arbitration but fail to agree on an arbitral institution, the dispute would be resolved under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The rationale for this provision is not entirely clear. First, it is difficult to imagine PSA parties agreeing to international arbitration yet failing to agree on the arbitral institution. Second, although the current PSA Law provides by default that disputes relating to the performance, termination or invalidity of a PSA are to be heard by the courts of Ukraine, it allows the PSA parties to depart from this rule by providing for a different dispute resolution mechanism in the agreement itself. In practice, all PSAs involving foreign investors known to us have provided for dispute resolution by international arbitration. Accordingly, the possibility of referring PSA disputes to arbitration already exists under the current framework and is used by the parties in practice.
Access to Land for Subsoil Users
The Draft Law expands the tools available to subsoil users to obtain access to land required for project implementation. In particular, it would allow a subsoil user to initiate court proceedings for the withdrawal of a land plot from permanent use and would provide more detailed rules for establishing land easements over state and municipal land.
Withdrawal of a Land Plot from Permanent Use. If a permanent land user does not consent to the withdrawal of a state or municipal land plot for the extraction of minerals of national significance, the competent authority must first apply to the court. If it fails to do so within three months, the holder of the special permit would be entitled to bring the claim itself. The mechanism is intended to remove the project's dependence on inaction by the competent land authority.
Land Easement. The Draft Law clarifies the procedure for establishing land easements over state and municipal land, including the interaction between the interested party, the authority responsible for the land plot and the land user, depending on the legal status of the land plot.
At the same time, the Draft Law does not provide for land plots to be granted together with a special permit for subsoil use as a single package. Obtaining rights to the land plots required for project implementation remains a separate matter that the subsoil user must address using the mechanisms for acquiring land rights provided by law.
Possibility of Holding an Auction with a Single Participant
The Draft Law proposes to amend the rules governing auctions for the sale of special permits for subsoil use. If only one participant is registered when the application period closes, the auction would be deemed to have taken place. The sole participant would be declared the winner at a price equal to its bid plus one auction increment.
The current framework does not provide for this possibility: if fewer than two applications to participate in the auction are submitted before the deadline, the auction does not take place. In practice, this means that even where there is a single interested participant, the right to use the relevant subsoil area cannot be granted. The proposed change would avoid the need to hold repeat auctions where demand is limited and would streamline the process for the sole interested investor to obtain the permit.
No Increase in the Automatic Extension Period for Special Permits
Part five of Article 15 of the Subsoil Code of Ukraine provides that special permits whose term expired during martial law are deemed automatically extended for the duration of martial law and for six months after its termination or cancellation, without a separate decision by the permitting authority.
In September 2025, Oleh Bondarenko, Chair of the Verkhovna Rada Committee on Environmental Policy and Nature Management, publicly stated that a proposal was being considered to automatically extend special permits for an additional two years after the termination or cancellation of martial law. The corresponding amendment was subsequently proposed in Draft Law No. 14249 in November 2025.
However, neither Draft Law No. 15454, registered on 30 July 2026, nor the Alternative Draft Law, both of which partly cover proposals set out in Draft Law No. 14249, contains the corresponding amendment to part five of Article 15 of the Subsoil Code of Ukraine. Accordingly, for special permits whose term expired during martial law, the automatic extension period provided by current law would end six months after the termination or cancellation of martial law.
Authors: Oleg Alyoshin, Yulia Adamovych