Ukraine close to shale gas deal

Ukraine’s government is weeks away from signing a shale gas production-sharing agreement with Chevron, of the US, and bringing in Italy’s Eni and France’s EDF as partners for a Black Sea hydrocarbon exploration project. Government and business industry sources said the landmark agreements would be signed next month, as Kiev steps up efforts to find alternatives to costly imports from Russia’s Gazprom. 

Officials said the two new energy deals stood to attract billions of dollars of investment, building upon a subsoil production sharing agreement signed in January with Royal Dutch Shell, which pledged to invest up to $10bn to explore Ukraine’s unconventional gas potential, including shale deposits.

Officials also hope to complete negotiations by the end of this year with an ExxonMobil-led consortium, which includes Shell, to explore for hydrocarbons off Ukraine’s western Black Sea coast.

“We have attracted investors which will within five to seven years maximum double Ukraine’s domestic gas production,” Viktor Yanukovich, Ukraine’s president, said last Thursday. Ukraine’s government gave formal approval that day for signing the production-sharing agreement with Eni and EDF involving exploration of oil and gas off the eastern coast of Ukraine’s Crimean peninsula.

Mykola Azarov, Ukraine’s prime minister, said the $4bn project could increase Ukraine’s annual oil and gas equivalent levels by 2m-3m tonnes in coming years.

Eni, which holds shale gas exploration interests in Ukraine, and EDF did not respond to inquiries.

Signing of the western Ukraine-based exploration project with Chevron, which has publicly confirmed its intentions in Ukraine, has been delayed by months amid environmental concerns expressed by regional legislators over the controversial “fracking” technology used to exploit shale gas.

After heated debate, regional lawmakers gave approval in recent weeks, paving the way for the agreement to be signed in early November, a government source said.

Ukraine consumes about 50bn cubic metres of gas annually, but produces just over 20bn cubic metres domestically. As a result it runs up more than $10bn in bills each year importing the difference from Russia’s Gazprom at prices that local officials describe as discriminatively higher than in EU markets.

Fonte: ft.com