Ukraine to Tender Shale Gas Fields
The Ukrainian government has announced that it will proceed with an international tender for rights to explore for unconventional gas in two vast concession areas containing conventional gas, shale gas as well as coal bed methane, crude oil and condensate.
The State Service for Geology and Mineral Resources (SGS) has announced a competition for the right to enter into production-sharing agreements (PSAs) with state companies for the Yuzivskyi conession (Donetsk and Kharkiv regions in east Ukraine )and Olesskyi concesion (in western Lviv region).
Ukraine plans to auction the rights to as much as 70 percent of production, with agreements extending for 50 years.
Ukraine’s TOV SPK-Geoservice and state-run PAT NAK Nadra Ukrainy will set up a venture to participate in the production sharing agreements, according to SGS spokesperson Maryna Pekarchuk.
The SGS state geologists estimate the reserves of the Yuzovska area at 2 trillion cubic metres and those of Olesska at 0.8 to 1.5 trillion cubic metres.
International majors have been actively sizing up the Ukrainian market for it unconventional hydrocarbon potential. According to the US state Energy Information Administration, Ukraine has Europe's fourth-largest shale gas reserves at 1.2 trillion cubic metres.
Last June, TNK-BP plans to invest $1.8 billion in unconventional gas projects in Ukraine over the next six to seven years, allowing for production of up to 3 billion cubic meters of gas a year.
In September, ExxonMobil Corporation and Naftogaz Ukrainy signed a preliminary agreement for cooperation in the development of gas from unconventional sources and Shell announced plans to invest $800 in unconventional gas projects in Ukraine.
In November, ENI SpA and Cadogan Petroleum announced plans to invest about USD 55 million in the exploration and production of shale gas in in the Lviv basin of western Ukraine. Ukraine's national JSC Naftogaz and Italy's integrated oil and gas signed a memorandum on the implementation of an agreement on research and cooperation at the end of September 2011.
Ukraine, is actively pursuing shale gas production in order to ease its dependence on Russia, and plans to produce 4-5 billion cubic meters of shale gas by 2020, thus covering up to 10% of its gas needs through alternative fuels.
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Ukraine: Rule of Law (or Law to Rule)
Shale Gas: Market Opportunities and Challenges in the EU and Ukraine