Shell, Ukraine Sign Shale Gas Production Sharing Act

             Shell, Ukraine Sign Shale Gas Production Sharing Act

  PR Newswire

  KYIV, Ukraine, January 18, 2013

KYIV, Ukraine, January 18, 2013 /PRNewswire/ --

The Donetsk and Kharkiv regional administrations voted in favor of the
production sharing agreement with the oil and gas company Royal Dutch Shell.
The document features ecology, social and other requirements for the investor
and regulates the relationship between the investor and the state. According
to the agreement, Shell will hand over 31-60 percent of the extracted gas to
the Ukrainian state.

The Shell project at the Ukrainian shale gas field Yuzivske has the potential
of evolving into the largest investment in Ukrainian history, reckons the
Environment and Natural Resources Minister Oleh Proskuryakov. "Shell's basic
scenario would be investing more than USD 10 billion, optimistic scenario -
USD 50 billion," he said. During the initial phase of the project, investments
into the Donetsk and Kharkiv region social infrastructure will amount to USD
140 million.

The official also noted that in five to six years the volume of gas extracted
at the site in question - Yuzivske shale gas field - could reach several
billion cubic meters, while in a decade the annual amount of extracted gas
could go up to at least 8-10 billion cubic meters. The estimated gas field
reserves in the Donetsk and Kharkiv regions equal 2 trillion cubic meters of
the natural resource.

The hydrocarbon extraction at the gas field will allow for lower gas prices,
believes the minister. While Ukraine currently pays USD 440-460 dollars per
cubic meter of Russian gas, the U.S. managed to reduce the gas price to USD
100 thanks to the new technology for gas extraction from unconventional

Shell won the right to explore shale gas in Yuzivske gas field in May 2012. At
the same time, Chevron Corp obtained the right to develop gas deposits at the
Oleske gas field in the Lviv region. The field reportedly may contain the
total of to 1.5 trillion cubic meters of gas.

Additionally, Shell is one of the four companies to get the right to develop
oil and gas reserves at the Ukrainian deep marine shelf field Scythian under
the Black Sea. In August 2012, American ExxonMobil, Dutch-British Royal Dutch
Shell, Romanian OMV Petrom, and Ukrainian state company Nadra were nominated
to unlock the underwater deposits.

In October 2012, Shell drilled its first well in Ukraine - Beliayivske-400 in
Kharkiv region.

Contact: For information, contact Maria Ivanova, +38-04-4332-4784,, Project Manager at Worldwide News Ukraine.
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