Ukrainian regions joins Shell in shale gas product share agreement

The Donetsk and Kharkiv regional administrations voted in favour of the production sharing agreement with the oil and gas company Royal Dutch Shell. As part of the PSA, Shell will hand over 31-60 % of the extracted gas to the Ukrainian state.

The Shell project at the Ukrainian shale gas field Yuzivske has the potential of evolving into the largest investment in Ukrainian history, according to the Environment and Natural Resources Minister Oleh Proskuryakov. "Shell's basic scenario would be investing more than US$ 10 billion, optimistic scenario – US$ 50 billion," he said. During the initial phase of the project, investments into the Donetsk and Kharkiv region social infrastructure will amount to US$ 140 million.

In five to six years the volume of gas extracted at the Yuzivske shale gas field could reach several billion m³, while in a decade the annual amount of extracted gas could go up to at least 8 - 10 billion m³. The estimated gas field reserves in the Donetsk and Kharkiv regions equal 2 trillion m³ of the natural resource.

Ukraine believes that the hydrocarbon extraction at the gas field will allow for lower gas prices. While Ukraine currently pays US$ 440-460 dollars per m³ of Russian gas, the U.S. managed to reduce the gas price to US$ 100 thanks to the new technology for gas extraction from unconventional sources.

Shell won the right to explore shale gas in Yuzivske gas field in May 2012 and in October 2012, Shell drilled its first well in Ukraine - Beliayivske-400 in Kharkiv region. At the same time, Chevron Corp obtained the right to develop gas deposits at the Oleske gas field in the Lviv region. The field reportedly may contain the total of to 1.5 trillion cubic m³.

Edited from press release by Peter Farrell.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/21012013/ukrainian-regions-joins-shell-in-shale-gas-product-share-agreement-_167/