Ukrainian Council Approves Shale Gas Deal with Chevron

October 4, 2013

A second regional council in Ukraine on Thursday approved a government draft for a $10 billion shale gas production-sharing agreement with U.S. energy major Chevron, clearing the way for it to be signed, Reuters reported on October 3.

Deputies in Lviv region voted by 66-to-3 in favor of the draft, which calls for shale exploration in the Olesska field in the west of the country.

A council in the neighboring Ivano-Frankivsk region, whose approval was also necessary, backed the deal last month.

"Now we will submit the documents to the Cabinet of Ministers and then there will be the signature," Energy and Fuel Minister Eduard Stavytsky told Reuters by telephone from Lviv.

Speaking to the council, Stavytsky said on Thursday that Chevron would spend several years and $350 million to assess reserves at Olesska which covers 5,260 square kilometers.

Total investments including extraction after exploratory drilling could reach $10 billion, he said.

Deputies in both regions had expressed concern over the ecological consequences of the "fracking" process, in which water and chemicals are used to break up rock, sandstone and shale deposits to release gas.

Stavytsky says the two shale gas projects could provide Ukraine with an additional 11 to 16 billion cubic meters (bcm) of gas in five years' time.

Copyright: Reuters, 2013.