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Ukraine drafts 2 major agreements on oil/gas production

October 21, 2013, 15:48 UTC+3
According to Ukrainian Prime Minister Nikolai Azarov, the $4 billion project could increase Ukraine’s annual oil and gas equivalent levels by 2 million to 3 million tons in 2014
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LONDON, October 21 (Itar-Tass) - Ukrainian government has drafted two agreements with Western corporations on the production of crude oil and natural gas on its national territory, The Financial Times said Monday.

“Ukraine’s government is weeks away from signing a shale gas production-sharing agreement with Chevron, of the US, and bringing in Italy’s Eni and France’s EDF as partners for a Black Sea “hydrocarbon exploration project,” the FT said.

The article referred to officials as saying the two new energy deals stood to attract billions of dollars of investment, building upon a subsoil production sharing agreement signed in January with Royal Dutch Shell, which pledged to invest up to $10bn to explore Ukraine’s unconventional gas potential, including shale deposits.

“Officials also hope to complete negotiations by the end of this year with an ExxonMobil-led consortium, which includes Shell, to explore for hydrocarbons off Ukraine’s western Black Sea coast,” the article said.

“We have attracted investors which will within five to seven years maximum double Ukraine’s domestic gas production,” Viktor Yanukovich, Ukraine’s president, said last Thursday.

According to Ukrainian Prime Minister Nikolai Azarov, the $4 billion project could increase Ukraine’s annual oil and gas equivalent levels by 2 million to 3 million tons in coming years.

The FT recalls that Ukraine consumes about 50 billion cubic meters (bcm) of gas annually, but produces just over 20 bcm. As a result, it pays over $10 billion each year to Russia’s major producer and exporter of natural gas, OAO Gazprom for importing the difference from Russia at prices, which local officials claim to be “discriminatively higher than in EU markets”.

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