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Emerstone Energy wins Ukraine shale search after Shell pulls out

KIEV, July 27 (Reuters) - A company set up by investment fund Emerstone Energy has won a contract for shale gas exploration in Ukraine, after Royal Dutch Shell PLC withdrew as separatist violence erupted in Ukraine’s east.

State company Nadra Ukrainy on Wednesday named Yuzgas B.V. as the winner of the tender.

Shale would help Ukraine’s ambitions to cut its gas purchases from Russia. Relations between the two plunged after Moscow’s 2014 annexation of Crimea.

The Yuzivska Field of 7,800 square kilometers could, according to preliminary estimates, yield about 8-10 billion cubic metres of gas per year.

It is located in the Kharkiv and Donetsk regions in areas bordering territory seized by pro-Russian separatists. Since 2014 the conflict there has claimed more than 9,400 lives.

Ukraine in 2015 produced about 20 billion cubic meters of gas and imported 16.5 billion.

“In circumstances of falling world oil prices Ukraine sharply reduced the search of hydrocarbons,” Nadra Ukrainy said in a statement without giving an exact amount of planned investments. “That is why it is important that the winner committed to invest several hundred million dollars into the programme of geological exploration at the Yuzivska site.”

Yuzgas B.V. says on its website it was set up specifically for the tender by Emerstone Energy, owned by Emerstone Capital Partners.

The latter was founded by Jaroslav Kinach, head of a private Canadian company Iskander Energy Corp and a former Ukraine country head of the European Bank for Reconstruction and Development (EBRD). (Reporting by Natalia Zinets; editing by Matthias Williams and William Hardy)

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