Kiev Post: Factbox for Ukraine’s landmark agreement with Shell on $10 billion shale gas project

Ivan Varchenko, an oppositional deputy in Kharkiv City Council, on Jan. 25 released the confidential text of agreement Ukraine signed with Shell. 

The 360-page agreement states that Ukraine will receive 31-60 percent of gas extracted in Yuzivska field that stretches over parts of Kharkiv and Donetsk oblasts.

Nadra Yuzivska, the Ukrainian company that takes part in the joint venture, is owned by 90 percent by state Naftogaz Ukraine, and 10 percent by SPK Geologic Service, which the Ukrainian media tie to the “Family, the close circle of President Viktor Yanukovych and his elder son Oleksandr.

Shell is obliged to pay a $25 million bonus to the state for signing the agreement, then $50 million more when extraction starts, $25 million when the first gas starts to come, and $100 million when peak production is reached, according to the agreement.

The license for use of subsoil will cost Shell $4 million, and detailed information on Yuzivska deposit – another $5 million. Investors will also pay $2 million per year for social projects in the first year. When exploration starts, the payment is to grow to $3 million, or 0.5 percent of the operation’s annual budget.  MORE