Ukraine to Allocate Methane Concessions to TNK-BP

Ukraine is to allocate land plots in Donetsk, Luhansk and Dnipropetrovsk regions to extract methane to TNK-BP, First Vice Premier Andriy Kliuyev said at a press conference in Kyiv on Wednesday.

"We’ve permitted TNK-BP to extract methane in dense rock. Now we're considering the allocation of land plots in Donetsk, Luhansk and Dnipropetrovsk regions to TNK-BP so they can extract methane there," he said.

Kliuyev added that TNK-BP's participation in methane extraction is interesting and important for Ukraine not only from an economic point of view, but also from the point of view of safety of the coal sector's operation.

"It's very beneficial for us: we receive additional gas and carry out the degassing of coalmines," he said.

In addition, joint investment projects on the extraction of shale gas in Ukraine with international oil companies Shell and Chevron are planned.

"I think that over five years we'll manage to almost double gas extraction in the country," he said.

It was reported earlier that Ukrainian national oil and gas company Naftogaz Ukrainy, TNK-BP and the Russian government signed a memorandum of cooperation in October 2010 on tight gas production in Donetsk region.

In addition, in November Luhansk regional administration, Luhansk regional council and TNK-BP signed a memorandum on cooperation in gas exploration and extraction from low-permeability sandstone in Luhansk region.

Deputy Ukrainian Fuel and Energy Minister Ihor Kiriushyn said that TNK-BP is ready to invest over $100 million in methane extraction in Ukraine.

Earlier Shell asked Ukraine to include a potential tight gas deposit in the Donetsk-Dnepr basin on the list of deposits that will be tendered for development under production-sharing agreements, according to the head of Shell's representation in Ukraine, Patrick van Daele.