Chevron gets Ukraine shale OK

Chevron office, Houston, Texas04 October 2013, News Wires – A second regional council in Ukraine on Thursday approved a government draft for a $10 billion shale gas production-sharing agreement with US supermajor Chevron, clearing the way for it to be signed.
Deputies in Lviv region voted by 66-to-3 in favour of the draft, which calls for shale exploration in the Olesska block in the west of the country, Reuters reported.

A council in the neighbouring Ivano-Frankivsk region, whose approval was also necessary, backed the deal last month in a 62-to-1 vote with 11 abstentions.

“Now we will submit the documents to the Cabinet of Ministers and then there will be the signature,” energy & fuel minister Eduard Stavytsky told the news wire.

Chevron won the auction for the Olesska block in May 2012.

The Olesska deal with Chevron will be the second shale agreement in Ukraine, following one signed earlier this year with Anglo-Dutch supermajor Shell for exploration in Yuzivska in the east.

Shale exploration forms part of plans by Ukraine to diversify its energy sources and ease its dependence on costly natural gas imports from Russia.

Speaking to the council, Stavytsky said on Thursday that Chevron would spend several years and $350 million to assess reserves at Olesska which covers 5260 square kilometres.

Total investments including extraction after exploratory drilling could reach $10 billion, he said.

Deputies in both regions had expressed concern over the ecological consequences of hydraulic fracturing.

Stavytsky says the two shale gas projects could provide Ukraine with an additional 11 billion to 16 billion cubic metres of gas in five years’ time.

Gas production in Ukraine totals about 20 Bcm, while the country of 46 million people consumes around 50 Bcm every year. Ukraine imports gas from Russia at about $400 per 1000 cubic metres.

Ukraine has repeatedly said it wants to diversify energy imports and cut supply from Russia having failed to reach a compromise with Moscow on pricing.

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