Ukraine Signs Major Shale Gas Deal

Category: Politics / Jan 25, 2013 1:04PM EDT
Ukraine took its first major step to rid itself of dependency on Russian gas imports on Thursday (January 24) when it signed a $10 billion shale gas deal with Royal Dutch Shell. The 50-year production sharing agreement, signed on the sidelines of the World Economic Forum in Davos, marks the biggest contract yet to tap shale gas in Europe and the largest foreign investment in the former Soviet republic. Disputes between Kiev and Moscow seriously disrupted Russian gas flows via Ukraine in 2006 and 2009, with European Union members Bulgaria and Slovakia left without energy in the depths of winter. They remain at odds over the terms of a 2009 Russian supply deal brokered by former Ukrainian prime minister Yulia Tymoshenko, for which she is serving a jail sentence. President Viktor Yanukovich presided over the signing between Shell's Chief Executive Peter Voser and new Energy Minister Eduard Stavitsky. "This is a great opportunity to say - it is just a beginning, we will continue to improve our relations, to be able to find flexible mechanisms to develop the economies of our countries in this difficult time of crisis," said Yanukovich after the deal signing ceremony. "We are very pleased with this big step which now means - and you can say that to me afterwards - now Shell needs to work and deliver and we will do that," said Voser. Ukraine chose Shell last May as a partner to develop the Yuzivska field in the east of the country and regional councils there approved the production-sharing deal last week, removing the last hurdle to signature. Ukraine is said to have Europe's third-largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic meters), according to the U.S. Energy Information Administration. Production in Ukraine is several years off and will depend on results from 15 test wells. - Reuters