* Firms to develop Yuzivska, Olesska fields
* Kiev wants to reduce dependence on Russian gas
KIEV, May 11 (Reuters) – Ukraine has picked Royal Dutch
Shell and Chevron Corp as partners in projects
to explore and develop two potentially large shale gas fields,
Prime Minister Mykola Azarov told the Euronews television
channel on Friday.
A government source had told Reuters this week Anglo-Dutch
Shell and Chevron of the United States were set to outbid
Italy’s Eni, Exxon Mobil and Russia’s TNK-BP in the tender which
Kiev sees as a step towards easing its dependence on Russian gas
supplies.
“Chevron and Royal Dutch Shell have been chosen as winning
bidders for Yuzivska and Olesska areas which have enormous gas
reserves,” Azarov told Euronews.
The Yuzivska area, won by Shell, is located in the eastern
Donetsk and Kharkiv regions while the other, Olesska, is in the
western Lviv region.
Ukraine has Europe’s third-largest shale gas reserves at 42
trillion cubic feet (1.2 trillion cubic metres), according to
the U.S. Energy Information Administration, behind France and
Norway.
Ukraine’s State Geological Service, which is more optimistic
than the U.S. EIA, estimates the reserves of the Yuzivska area
alone at 2 trillion cubic metres and those of Olesska at 0.8 to
1.5 trillion.
The geological service has also said the Yuzivska area would
require $250 million-$300 million in exploration investment,
while Olesska would need $150 million-$200 million. Tender
application fees were $1.9 million for Yuzivska and $1.3 million
for Olesska.
The winners of the tender will enter production sharing
agreements with state firm Nadra Ukrainy and SPK-GeoService, a
privately-owned Ukrainian company picked by the government as
its partner in a separate tender this year.
Ukraine imports about two-thirds of its gas from Russia at a
price that has been rising steadily for the last few years and
is expected to average about $415 per thousand cubic metres this
year.
Moscow says it would cut the price for Ukraine only if
Russian gas giant Gazprom is allowed to buy into
Ukrainian gas pipelines, which tranship the bulk of Russian gas
to Europe, a trade-off Ukraine has so far refused to accept.
Talks on reviewing the price have lasted for over a year but
so far failed to produce any results, prompting concerns among
Russia’s European consumers who in the past have suffered from
supply disruptions due to conflicts between Moscow and Kiev.
