Ukraine Moves Closer to Shale Agreement with Chevron

The Ukraine’s Ivano-Frankivsk region voted in favour of an amended government draft for a production-sharing agreement with US energy-company Chevron, paving the way to a new shale gas deal in the East European country.

The Ivano-Frankivsk region had rejected a previous draft asking for guarantees at the end of August. Ukraine’s Minister of Energy and Coal Industry Eduard Stavytsky said last week that Cabinet Minister had taken into account requirements of the regional Council.

The government will be able to ink an agreement with Chevron after the approval of a second council in the neighbouring Lviv region. 

Ukraine opened the doors to shale explorations last week. It signed a contract with Royal Dutch Shell, allowing the Netherland's energy company to explore the Yuviska block. Gas extraction activities are scheduled to start in 2015. Stavystkyi said that between 30% and 60% of extracted gas would belong to Ukraine, while the rest would be split between Royal Dutch Shell and Nadra Yuzivska. 

The western Ivano-Frankivsk strongly backed the agreement, which would give Chevron access to the Olesska shale field.

The industry is carefully looking at Ukraine’s shale gas developments, after Poland registered a series of setbacks in the last months and the UK met a growing public resistance in the last weeks. 

Ukraine's government is keen to produce locally to ease dependence on Russia. Ukraine also continues to make ambitious plans to decrease national energy consumption, switch its power stations from natural gas to coal, build an LNG terminal, and open reverse flows of gas from Europe.