Ukraine-Chevron Sign Hydrocarbons Sharing Agreement

KYIV, Ukraine, November 5, 2013 /PRNewswire/ --

Ukrainian government signed shale gas production-sharing agreement (PSA) with Chevron of the U.S. and Ukraine's state owned Nadra Oleska. The PSA stipulates the distribution of hydrocarbons to be extracted at Oleske gas field, reports president.gov.ua.

The PSA was signed in the presence of the President of Ukraine Viktor Yanukovych by the Minister of Energy and Coal Industry Eduard Stavytskyi and representative of Chevron Derek Magness as well as Nadra's Chairman Viktor Ponomarenko. According to Chevron, the Oleske gas field covers approximately 1.6 million acres.

The new deal is expected to attract billions of dollars of investment into Ukraine, especially taking into consideration the recent PSA the country signed in January with Royal Dutch Shell, according to ft.com. The January agreement secured the Eastern European state with USD 10 billion investment for the exploration of its unconventional gas deposits. 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 at Yuzivske is expected to begin in 2015. According to the estimate provided by Shell, Yuzivske field contains about 3-3.5 trillion cubic meters of gas deposits. Yuzivske and Oleske are expected to provide Ukraine with up to ten percent of domestically consumed gas by 2020.

Moreover, by the end of 2013, Ukrainian state officials expect to conclude negotiations with an ExxonMobil-led group of companies concerning the exploration of hydrocarbons at the Black Sea shelf.

Notably, Ukraine expects that signing of the Association Agreement with the EU will increase the investment attractiveness of the country's energy sector. This was stated by President Yanukovych at the plenary session of the Council of National and Foreign Investors in Kyiv. According to him, harmonization of Ukrainian legislation with the Third Energy Package of the EU will increase the competitiveness, transparency and investment attractiveness of Ukrainian energy sector.

He also stressed that Ukraine's cooperation with the world's leading companies in hydrocarbon production facilitated the introduction of modern technologies and experience in Ukraine while also strengthened energy security of the state.