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Shell, Ukraine hash USD 10bn shale gas deal

25th January 2013

Ukraine signs major deal with Royal Dutch Shell to kick-start shale gas production

Shell, Ukraine hash USD 10bn shale gas deal
Shell will sink 15 exploratory wells in the Yuzovska field in an area of 7,000 square kilometres

Europe’s largest oil company, Royal Dutch Shell on Thursday inked a deal valued at USD 10bn with the Ukrainian government as part of a shale gas production sharing agreement targeting eastern Donetsk and aimed at helping the country ease its dependence on Russian gas.

The 50-year deal was signed by Shell CEO Peter Voser and Ukrainian energy minister Eduard Stavitsky on the sidelines of the World Economic Forum in Davos, Switzerland.

“We will start to explore in the next few years, and if positive results come through, then we will see a multi-billion dollar investment over time,” Voser told BBC.

Shell will sink 15 exploratory wells in the Yuzovska field in an area of 7,000 square kilometres, according to Ukraine's natural resources minister Oleh Proskuryakov. The eastern Donetsk location is believed to hold three trillion cubic metres of natural gas, enough to meet the country’s gas needs for 70 years.

Some forecasts suggest that Ukraine, France and Poland may hold Europe's largest shale rock deposits.

The country is hoping to renegotiate gas prices with its Russian neighbour, which it claims are too high.