Worldwide News Ukraine: Ukraine Offers Favorable Conditions for US Gas Drillers

It is profitable to explore and produce gas in Ukraine now, John Dizard says in his article for Financial Times. He explains that gas is cheaper in America and, to get sizeable returns, companies search for more cost-effective deals elsewhere. "The Ukrainian gas prices are high enough to pay for the costs of shale and coal-bed gas, which are much higher than conventional gas," he writes.

While gas in the U.S. is priced at USD 3.5-4 per MMBtu, Ukrainian prices are closer to USD 12, notes Dizard. Additional upside of gas development in Ukraine is "extensive domestic pipeline network." He reminds that Ukraine recently inked deals with Chevron and Shell regarding shale and coal bed methane extraction in the country.

John Dizard lists reasons for Ukraine to provide "compatible discount rates" for foreign companies. First, it is Russia's strategic success in building alternative pipelines to provide gas to Europe bypassing Ukraine. At the moment, Ukrainian gas transporting system delivers approximately 70-percent of Russian gas to Europe. Second, domestic business in Ukraine needs reliable and cheap gas for the factories.  MORE