Ukraine to Sign Second Shale Gas Agreement with Chevron

Ukraine is pushing for shale gas development and aims to conclude negotiations with US-based Chevron Corp. as early as next week.  Its deal with an ExxonMobil-led consortium is expected by August.

“I am pleased that our partnerships is gradually gaining ground,” said President Viktor Yanukovych after the meeting with James Johnson, president of Chevron Europe, Eurasia and Middle East Exploration and Production (CEEMEEP).

Ukraine’s central government sent the deal’s final text to local city councils of Lviv and Ivano-Frankivsk in western Ukraine. The vote, which could take place as early as next week, would pave the way to the final agreement. Government and Chevron would then form a joint venture to explore shale gas in Olesska field.

According to Reuters, Kiev estimates Olesska shale reserves at up to 1.5 trillion cubic metres, but local politicians and environmental lobby groups have voiced their concern.

The government is keen to produce locally to ease Ukraine’s dependence on Russian gas. Ukraine also continues to make ambitious plans to decrease national energy consumption, switch its power stations from natural gas to coal, build an LNG terminal, and open reverse flows of gas from Europe.

The shale-gas deal signed with Royal Dutch Shell on January 24 signalled Ukraine’s aspiration to become a self-sustaining gas producer and, simultaneously, an energy resource exporter.

The country is looking forward to clinching a deal with a consortium led by ExxonMobil on the Skifska field in the Black Sea. It would be the third agreement in one year.

Chevron has taken a leadership position in European shales. It plans to or has undertaken unconventional gas activities in Poland, Bulgaria, Romania, Lithuania and Ukraine.