Multinational Oil and Gas Company Sanctioned to Start Operations in Ukraine

KYIV, Ukraine, September 13, 2013 /PRNewswire/ --

Royal Dutch Shell signed an agreement with the Ukrainian government, which gives green light to the company's operation in Yuzivske gas field. The document was signed within the framework of the 2012 Agreement on distribution of hydrocarbons extracted from the Yuzivske field. Notably, along with conventional natural gas, the company plans to extract both shale gas, and tight gas.

"This Agreement grants [Shell] full permission to launch investment and operation procedures at the Yuzivske field. Starting today, the work of the Royal Dutch Shell is commencing in Ukraine de jure and de facto," commented Ukraine's Minister of Energy and Coal Industry Eduard Stavytskyi at the signing.

The Minister highlighted that according to the product distribution agreement, during the first stage the Royal Dutch Shell will invest USD 500 million into the geological exploration of the area. The company's overall investment into the exploration and infrastructure development of Yuzivske are estimated at USD 10 billion, reads kmu.gov.ua.

Eduard Stavystkyi reinforced that depending on the actual amounts of extracted gas, 30 to 60 percent of the developed product would belong to the country. At the same time the shares of the participating investors - the Royal Dutch Shell and Ukraine's Nadra Yuzivska - will constitute two equal parts.

The gas extraction is expected to begin in 2015. According to the estimation provided by Shell, Yuzivske field contains about 3-3.5 trillion cubic meters of gas deposits.

In May 2012 Royal Dutch Shell received the right to develop Ukrainian shale gas field Yuzivske in Eastern Ukraine (Kharkiv and Donetsk oblasts). In June 2012 Stavytskyi stated that Shell decided to provide Ukrainian government with a bonus of USD 400 million - on top of the share in the profits from the hydrocarbon production.

At the same time Chevron obtained the right to develop Ukrainian shale gas field Oleske (western Ukraine, Lviv oblast). Yuzivske and Oleske are expected to provide Ukraine with up to ten percent of domestically consumed gas by 2020.

Moreover, in August 2012, Shell together with ExxonMobil, Romanian OMV Petrom, and Ukrainian state company Nadra received joint rights to develop underwater deposits at the deep marine gas field Skifske in the Black Sea.