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Shell and Chevron take over Ukrainian shale gas fields

14th May 2012

By 2020 some 10 per cent of Ukraine’s natural gas supply will come from two shale gas sites, to be run by Shell and Chevron respectively.

Shale gas could take a significant share of Ukraine's energy mix by 2020

Oil giants Royal Dutch Shell plc and Chevron Corp have obtained the right to develop two Ukrainian shale gas fields, prime minister Mykola Azarov announced this weekend.

The Yuzivske and Oleske fields together are expected to provide Ukranie with to 10 per cent of domestically consumed natural gas by 2020.

Approximately USD 370 million will be invested in the projects, depending on how commercially viable the gas reserves prove to be.

Industrial extraction of gas at the sites will begin in 2018-2019, accoridng to a statement. The Ukraine's state geological service estimated the amount of both conventional and unconventional, as well as condensed gas deposits at the 6,000 sq km Oleske is 3 trillion cubic meters. The Yuzivske field may offer up to 4 tr cubic meters of gas, it also found.

Ukraine announced the public bid to develop the prospective seven trillion cubic meters of gas in the fields in February. Exxon Mobil, Shell, and TNK-BP placed their bids for the right to develop the Yuzivske field in eastern Ukraine (Donetsk oblast), while Chevron and Eni competed for the right to establish gas production at Oleske, Lviv region.

The US Energy Information Administration assessed the total of Ukrainian gas resources at 1.2 trillion cubic meters. This secures Ukraine the third spot among the European countries, after France and Norway, that have largest shale gas reserves, reported Reuters.

Ukraine began reforming its energy system, adopting the State Program on Energy Efficiency 2010-2015. According to the document, Ukraine will reduce domestic energy consumption through increasing energy efficiency, as well as developing domestic gas reserves, introducing green energy production technology, and diversifying gas export.

Ukrainian energy minister,Yuriy Boyko has previously said the country will set up domestic shale gas extraction within five years.

It took the US 20 years to reach a similar goal. By 2020, Ukraine plans to extract 4bn - 5bn cubic meters of shale gas annually. The country prospects to consume 53.7bn cubic meters of gas with 26bn of total domestic consumption.

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