“The treaty’s key advantages are that it will complicate expanding the list of exemptions, introduce a common disputes settlement mechanism based on WTO [World Trade Organization] principles, and require that technical barriers, sanitary and phytosanitary measures comply with WTO rules,” says Olena Bilan, chief economist at Dragon Capital.

It could take six to eight years to bring production to commercial levels, according to Dennis Sakva, energy analyst at Kiev-based investment bank Dragon Capital. “But the government has clearly realised that there will be no easily attainable discounts on gas prices from [Russia’s] Gazprom,” Mr Sakva said. “So they decided to explore other opportunities to improve their negotiating position by allowing the oil and gas majors to participate in domestic oil and gas production.”

Dragon Capital: The news is very positive for Ukrnafta as the aforementioned gas volume implies up to $118m of additional revenues and EBITDA in 2012.

Kyiv-based investment bank Dragon Capital commented on the 2011 third quarter losses of listed company MMK Illicha, another Metinvest subsidiary. “Such disappointing results lead us to believe that the company widened its transfer pricing practices. The reported average realized steel price was abnormally low, falling $40-60/t short of the average market price in 3Q11,” the bank wrote in a note to investors.

“Through the end of the year, the economy will be helped by domestic consumption, which remains strong because of loose fiscal policy and exceptionally low inflation,” said Olena Bilan, the chief economist at Kiev-based investment bank Dragon Capital. “This factor will weaken next year because fiscal policy will be more conservative after elections.”

“We think this deal has no immediate short-term impact on Ukraine’s fuel supply balance as coal gasification plants will take three to five years to build. However, their launch could enable the phasing out of gas imports in the medium term,” investment bank Dragon Capital wrote.

"Remaining cut off from external markets, the government continues to explore unconventional sources of domestic foreign exchange funding," reads a report by Kyiv-based investment bank Dragon Capital."We think government borrowings from households will be limited to several hundred million dollars this year, but may potentially become a substantial source of funding in the medium term."