Royal Dutch Shell Signs Deal To Explore Ukrainian Gas Field

Anglo-Dutch company Royal Dutch Shell has signed a deal with Ukraine to explore for natural gas in Ukraine's Yuzovska deposit. Ukraine's Energy and Coal Industry Minister Eduard Stavitskyy said on September 12 that Royal Dutch Shell and Ukrainian company Nadra Yuzovskaya signed the deal, which calls for the Anglo-Dutch company to spend some $500 million on surveying at the field with an expected additional $10 billion to be spent in developing the site and infrastructure.

Ukrainian Prime Minister Mykola Azarov said the previous day that Ukraine hopes the field will eventually be able to produce some 20 billion cubic meters per year.

"It is this Agreement that gives complete permission for investing and carrying out activities in the Yuzivska area. Beginning today, Royal Dutch Shell's work has commenced in Ukraine de facto and de jure," Minister of Energy and Coal Industry Eduard Stavytskyi said.

The Minister stressed that according to the agreement, Shell will invest $500mn into geoexploration in the first stage, while overall investments of the company into industrial and communication development in the Yuzivska area are estimated be close to $10bn.

The Minister stressed that in the Yuzivska area production will include traditional natural gas, shale gas and gas from tight sandstones.

Stavytskyi said that after signing of the operational Agreement tenders would begin for geophysical exploration and seismic operations.

Yuzivska is located in the Donetsk and Kharkiv regions. According to Royal Dutch Shell expert forecasts, the predictable gas reserves are between 3 and 3.5 trillion cubic meters.

Copyright, Radio Free Europe, 2013.