Shell’s major shale gas deal with Ukraine

Ukraine is to sign a landmark shale gas deal worth more than $10 billion (£6.3bn) with oil and gas firm Shell. The Dutch company is expected to give 31-60% of […]

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By Priyanka Shrestha

Ukraine is to sign a landmark shale gas deal worth more than $10 billion (£6.3bn) with oil and gas firm Shell.

The Dutch company is expected to give 31-60% of the extracted gas following an agreement approved by the Donetsk and Kharkiv regional administrators.

Oleh Proskuryakov, Environmental and Natural Resources Minister said the project has the potential of becoming the “largest investment in Ukrainian history”. He said: “Shell’s basic scenario would be investing more than $10 billion (£6.3bn), optimistic scenario – $50 billion (£31.5bn).”

He added the volume of gas extracted at the Yuzivske shale gas field, where Shell won the right to explore shale gas last May, could reach several billion cubic metres, going up to at least eight to 10 billion cubic metres by the end of the decade. The estimated gas field reserves in the Donetsk and Kharkiv regions are two trillion cubic metres.

The Minister said the hydrocarbon extraction at the gas field could lead to lower gas prices as he believes the US managed to cut its gas prices due to the new technology for gas extraction from unconventional sources, also called fracking.

Ukraine is believed to have Europe’s third largest shale gas reserves at 42 trillion cubic feet.