Last updated on April 17, 2014 at 17:30 EDT

Ukraine Regions Vote in Favour of PSA With Shell

January 18, 2013

KYIV, Ukraine, January 18, 2013 /PRNewswire/ –

The Donetsk and Kharkiv regional administrations voted in favor of the production
sharing agreement with the oil and gas company Royal Dutch Shell. The document features
ecology, social and other requirements for the investor and regulates the relationship
between the investor and the state. According to the agreement, Shell will hand over 31-60
percent 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, reckons the Environment and
Natural Resources Minister Oleh Proskuryakov. “Shell’s basic scenario would be investing
more than USD 10 billion, optimistic scenario – USD 50 billion,” he said. During the
initial phase of the project, investments into the Donetsk and Kharkiv region social
infrastructure will amount to USD 140 million.

The official also noted that in five to six years the volume of gas extracted at the
site in question – Yuzivske shale gas field – could reach several billion cubic meters,
while in a decade the annual amount of extracted gas could go up to at least 8-10 billion
cubic meters. The estimated gas field reserves in the Donetsk and Kharkiv regions equal 2
trillion cubic meters of the natural resource.

The hydrocarbon extraction at the gas field will allow for lower gas prices, believes
the minister. While Ukraine currently pays USD 440-460 dollars per cubic meter of Russian
gas, the U.S. managed to reduce the gas price to USD 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. 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
meters of gas.

Additionally, Shell is one of the four companies to get the right to develop oil and
gas reserves at the Ukrainian deep marine shelf field Scythian under the Black Sea. In
August 2012, American ExxonMobil, Dutch-British Royal Dutch Shell, Romanian OMV Petrom,
and Ukrainian state company Nadra were nominated to unlock the underwater deposits.

In October 2012, Shell drilled its first well in Ukraine – Beliayivske-400 in Kharkiv

SOURCE Worldwide News Ukraine

Source: PR Newswire