Chevron and Shell Tipped to be Winners of Ukraine Shale Gas Bids
Chevron and Royal Dutch Shell are reportedly set to win significant tenders for the exploration two large concessions for unconventional natural gas resources.
News agencies have quoted Environment and Natural Resources Minister Eduard Stavitsky as saying that the Ukrainian cabinet had approved the winning bidders.
Chevron would win exclusive right to sign a production-sharing agreement for the Olessky field in the western Lviv region. Ukraine’s state geological service reports it holds gas reserves of 0.8 to 1.5 trillion cubic metres. Eni SpA was also bidding for the Olessky field.
Shell would be awarded a production-sharing agreement Yuzovska concession, located in the eastern Donetsk and Kharkiv regions. Exxon Mobil and TNK-BP were also reported to be bidders for Yuzovska, which estimated to hold reserves of the Yuzovska area at 2 trillion cubic metres.
The tender specifications require winning bidders on the Oleska area to invest at least $160 million during the exploration stage and $3.1 billion if the decision to start production is made (accordingly, $200 million and $3.7 billion in the Yuzivska area).
Both companies would form partnerships with state-run PAT NAK Nadra Ukrainy and TOV SPK-Geoservice, a private company owned by Ukraine’s leading geologists.
International majors have been actively sizing up the Ukrainian market for it unconventional hydrocarbon potential. Other recent deals have included:
- June 2011, TNK-BP plans to invest $1.8 billion in unconventional gas projects in Ukraine over the next six to seven years, allowing for production of up to 3 billion cubic meters of gas a year.
- September 2011, ExxonMobil Corporation and Naftogaz Ukrainy signed a preliminary agreement for cooperation in the development of gas from unconventional sources and Shell announced plans to invest $800 in unconventional gas projects in Ukraine.
- November 2011, ENI SpA and Cadogan Petroleum announced plans to invest about USD 55 million in the exploration and production of shale gas in in the Lviv basin of western Ukraine. Ukraine's national JSC Naftogaz and Italy's integrated oil and gas signed a memorandum on the implementation of an agreement on research and cooperation at the end of September 2011.
Earlier this year, Ukrainian Energy and Coal Industry Minister Yuriy Boiko stated that Ukraine will be able to produce 10-15 billion cubic meters of shale gas in five to seven years.
Realted Reading: Prospects for Shale Gas Exploration and Production in Ukraine