KIEV May 16 Royal Dutch Shell and
Chevron Corp, Ukraine's partners for exploring and
developing shale gas, will start commercial gas production in
2017, a government minister said on Wednesday.
"Drilling is likely to start next year," Environment and
Natural Resources Minister Eduard Stavitsky told a news
conference of plans which focus on two potentially large shale
Shell will develop the Yuzivska area, in eastern Donetsk and
Kharkiv regions, while Chevron will explore the Olesska area in
the western region of Lviv.
"Commercial extraction on both areas will begin in 2017," he
The two areas could yield at least 15 billion cubic metres
of gas per year and Yuzivska alone - where about 3,000 wells
were likely to be drilled - could produce a total of one
trillion cubic metres, he said.
The former Soviet republic has 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, behind France and Norway.
Ukraine's State Geological Service, which is more optimistic
than the U.S. EIA, estimates Yuzivska reserves at 2 trillion
cubic metres and those of Olesska at 0.8 to 1.5 trillion.
Stavitsky declined to give details of the future investments
in gas production, while the geological service has said the
Yuzivska area would require $250 million-$300 million in
exploration investment, while Olesska would need $150
The winners of the tender will enter production sharing
agreements with state firm Nadra Ukrainy and SPK-GeoService, a
privately-owned Ukrainian company chosen by the government as
its partner in a separate tender this year.
Ukraine imports about a half of its gas from Russia at a
price that has been rising steadily for the last few years and
is expected to average about $440 per thousand cubic metres this
(Reporting by Pavel Polityuk; editing by Richard Balmforth and