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Shell & Chevron win Ukrainian exploration rights

World Pipelines,

Ukraine’s Prime Minister Mykola Azarov has said that Shell and Chevron have won the bidding to develop the Yuzivske and Olesska shale gas fields.

"Chevron and Royal Dutch Shell have been chosen as winning bidders for Yuzivska and Olesska areas which have enormous gas reserves," Azarov told Euronews.

Shell will develop the Yuzivska area and Chevron will develop the Olesska region. The companies will have to enter into production sharing contracts with state-owned Nadra Ukrainy and SPK-GeoService, a privately owned Ukrainian company.

The Ukrainian Geological Service has stated that the Olesska field will require US$ 150 – 200 million in exploration investment, while Yuzivska will require US$ 250 – 300 million in investment.

According to the US Energy Information Administration, Ukraine has Europe’s third largest shale gas reserves, estimated at 42 trillion ft3. Ukraine considers this estimate conservative and the State Geological Service estimates that there is 2 trillion ft3 of gas in the Yuzivska area and 0.8 – 1.5 trillion in the Olesska region.

Where other European countries have been slow to develop shale gas reserves because of concerns over fracking and groundwater pollution, Ukraine is particularly keen to develop its shale gas reserves because the price of Russian gas has been steadily increasing for the last few years. Ukraine currently imports 60% of its natural gas from Russia and the only way Russia will agree to lower the price is if it is allowed to buy into the Ukrainian gas pipeline system, which Ukraine is unwilling to allow.

Written by Peter Farrell.

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