FT: Ukraine deal confirms Shell's commitment to shale gas
Shell’s decision to invest $10bn in the development of shale gas in Ukraine is certainly a significant move.
First, it confirms Shell’s commitment to shale and the company’s determination to override environmental objections to the technology of fracking. Shell believes shale can be developed safely and cleanly enough to avoid damaging either the environment or the company’s reputation. This move will help to confirm shale’s arrival in the mainstream of the energy market.
Second, Shell clearly believes that the European gas market is going to change radically. Countries such as France and Germany may not want to develop their own shale gas but will be prepared to import either direct supplies of gas, or supplies of electricity generated by burning the gas in Ukraine and other producing countries. For historic reasons the electricity market in Europe tends to be very nationally based. This deal suggests that the whole market is now likely to change. Ukrainian shale reserves are likely to produce more gas than the country itself needs, and the investment only makes sense if an export market is available.