* Ukraine says Shell estimates investment at $10 bln-$50 bln
* Project is key to easing dependence on Russian gas imports
DONETSK, Ukraine Jan 16 Ukraine moved one step
closer to a breakthrough shale gas deal with global energy major
Royal Dutch Shell on Wednesday after local authorities
in the eastern Donetsk region approved a planned production
The former Soviet republic, which is said to have Europe's
third-largest shale gas reserves at 42 trillion cubic feet (1.2
trillion cubic metres) and wants to end reliance on Russian
natural gas supplies, chose Shell last May as a partner to
develop the Yuzivska shale gas field.
Deputies of the Donetsk regional council voted to approve
the deal with Shell, removing one of the final hurdles to an
Shale gas exploration requires a process called "fracking"
in which fluid is injected at high pressure into beds of rock,
often deeply situated in the ground, to access gas reserves
"If exploration is successful in the Yuzivska area, we will
be able to produce a few billion cubic metres (bcm) of gas per
year in just five-six years and eight to 10 bcm in 10 years,"
Environment and Natural Resources Minister Oleh Proskuryakov
told the council.
"At its peak, in 13-15 years, annual production may exceed
20 bcm. This will not only strengthen our energy independence
but will also significantly reduce gas prices."
Ukraine currently pays about $430 per thousand cubic metres
of Russian gas under a 10-year deal signed in 2009, a price it
"Secondly, the Yuzivska area production sharing agreement is
the biggest project in Ukraine that will attract tens of
billions of dollars in investment," Proskuryakov said.
"Shell sees investment at $10 billion under the most likely
scenario and over $50 billion under the optimistic scenario."
Proskuryakov had earlier said his ministry expected to
finalise and sign the deal in the first quarter of this year.
Only France and Norway have bigger estimated shale gas
reserves than Ukraine in Europe.