Shell and Ukraine Ink Agreement for Extraction in Yuzivska Block

Royal Dutch Shell signed an agreement with Ukraine to explore the Yuzivska block, with gas extraction activities starting in 2015. The Ukrainian government released a note about the agreement on Thursday, defining the amount and the planning of the investments. 

“It is directly the agreement that gives complete permission for investing and carrying out activities in the Yuzivska area. Since this day the work of Royal Dutch Shell is commenced in Ukraine in fact and in law,” Minister of Energy and Coal Industry Eduard Stavytsky said. 

According to the agreement, Royal Dutch Shell will invest around $500 million into geo-exploration at the first stage, while the total investments is expected to total $10 billion. 

Stavystkyi said that between 30% and 60% of extracted gas would belong to Ukraine, while the rest would be split between Royal Dutch Shell and Nadra Yuzivska.

Stavytskyi noted that first free gas from Yuzivksa area is expected in the end of 2014. Gas extraction will start in 2015.

Yuzivska area is situated on the territory of Donetsk and Kharkiv regions. Royal Dutch Shell estimated 3-3.5 trillion cubic meters of gas in place. Along with conventional natural gas, the company plans to extract both shale gas, and tight gas.

Last week Ukraine signed an agreement with electric utility RWE. The document regulated both gas supplies to Ukraine and gas storage in the underground facilities.