* Deal faces opposition from local councils, far-right group
* Ukraine hopes shale gas will ease its dependence on Russia
KIEV Jan 29 Ukraine has removed a self-imposed
May 2013 deadline on signing a shale gas deal with energy major
Chevron which faces scrutiny in local councils dominated
by opposition groups, a government document showed on Tuesday.
The former Soviet republic is seeking to ease its dependence
on costly natural gas supplies from Russia and signed a landmark
production sharing agreement with Shell this month that
could bring in $10 billion in investment.
But the move on Tuesday indicated that the government had no
quick plan to overcome domestic opposition to the second large
shale gas deal and its approval could be delayed significantly,
casting doubt on the whole project.
Ukraine is said to have Europe's third-largest shale gas
reserves at 42 trillion cubic feet (1.2 trillion cubic metres),
according to the U.S. Energy Information Administration.
The Kiev government picked Shell and Chevron as partners to
develop the Yuzivska area in eastern Ukraine and Olesska area in
western Ukraine, respectively, through a tender last May.
Ukraine estimates the reserves of the Olesska area at 0.8 to
1.5 trillion cubic metres.
But whereas local councils in the eastern Donetsk and
Kharkiv regions, loyal to the ruling Party of the Regions,
quickly approved the Shell deal, opposition groups that dominate
western Ukrainian councils threaten to block the Chevron one.
The far-right nationalist Svoboda party, which surged on to
the political landscape in parliamentary elections in October,
is strong in the west of the country and opposes shale gas
exploration citing environmental concerns.
Shale gas technology uses a process called "fracking" in
which fluid and chemicals are injected at high pressure into
beds of rock, often situated deep in the ground, to access gas
reserves trapped there.
Critics say fracking could contaminate water and cause other
The government decree adopted last month and published on
Tuesday removes the May deadline for signing the deal but does
not set any new term for its conclusion.
Developing shale gas reserves is a key element in Ukraine's
strategy aimed at securing energy independence. Kiev's current
deal with Russia sets an exorbitant price for gas - about $430
per thousand cubic metres this quarter, - Ukraine says.
Kiev's attempts to renegotiate the deal have so far failed.
Straining the bilateral relations even further, Russia this
month sent Ukraine a $7 billion bill for the gas that it says
Kiev was obliged to buy but never bought as it tried to reduce
imports last year.