Ukraine seeks green light for Chevron shale deal

Thu Jun 13, 2013 11:05am EDT

* Kiev government sends draft project to local councils

* If approved, Olesska shale deal would be second for Ukraine

* Project faces some opposition in western Ukraine

KIEV, June 13 (Reuters) - Ukraine's government has concluded negotiations with U.S. energy major Chevron on a second shale gas project and is lining up another energy deal with an ExxonMobil-led consortium, its energy minister said on Thursday.

Chevron has been in talks with Kiev for several months over exploration in the 5,260sq km Olesska field in western Ukraine, with the government keen for shale gas to ease Ukraine's dependence on costly natural gas supplies from Russia.

Energy Minister Eduard Stavytsky told journalists on Thursday that a draft agreement with Chevron had been sent to local authorities for approval, which is required under Ukrainian law. "They will consider it some time between June 18 and 21," he said.

The former Soviet republic signed a $10 billion production-sharing agreement with Royal Dutch Shell this year for shale gas exploration in the Yuzivska field in the east, but the Chevron plan has come up against more opposition.

Kiev estimates Olesska shale reserves at up to 1.5 trillion cubic metres, but local politicians and environmental lobby groups have voiced their concern.

Government officials and Chevron have met local groups to try to allay fears of environmental damage from shale exploration, which involves the injection of water and chemicals into layers of rock to release trapped gas.

Hinting that the Chevron project might be in for a rough ride with regional authorities, Natural Resources Minister Oleh Proskuryakov said: "Nobody can give any guarantee (about the outcome of the debate), but we are hoping for a constructive dialogue.

"If there is a positive decision, an agreement could be signed within a month," he told Reuters on the sidelines of a business conference.

Energy Minister Stavytsky, meanwhile, is already looking ahead to the next significant energy deal - an offshore one with a consortium led by ExxonMobil on the Skifska field in the Black Sea.

"I am convinced that we will achieve a positive result and sign this deal in late July or early August," he said.