Chevron Gets Lithuanian President’s Backing for Shale Gas

Chevron Corp. (CVX), the second-largest U.S. energy company, won support from Lithuanian President Dalia Grybauskaite for shale-gas exploration plans that some of the country’s residents and lawmakers oppose.

Lithuania needs to find out to how far its shale-gas reserves can go as an alternative to Russian natural gas, spokeswoman Daiva Ulbinaite quoted the president as saying today after a meeting with Jay Johnson, Chevron’s head of Eurasia, Europe and Middle East exploration and production, in the capital, Vilnius.

East European countries, including Poland and Ukraine, are turning to shale gas in their efforts to lower energy costs and their dependence on Russian supplies. Chevron in October bought 50 percent of a Lithuanian oil and gas recovery company and in January submitted the only bid in a tender for shale-gas exploration rights in the Baltic nation. Some landowners and lawmakers have urged the government to halt the tender on concern that the exploration process could contaminate ground water.

“We expect to be able to engage with the local communities” and assuage their concerns, Chevron’s Johnson told reporters at the president’s office. “We’re very pleased with the chance to help create Lithuania’s energy future.”

Reserve Potential

Lithuania, which wants to reduce it’s total dependence on Russia’s Gazprom OAO (GAZP) for natural gas supplies, probably has about 180 billion cubic meters of recoverable shale gas, KPMG said in a report in May. That’s the equivalent of 60 years of gas consumption in the country, at current usage.

Shale-gas reserves in Lithuania, at an estimated depth of 2 kilometers (1.2 miles), are twice as close to the surface as in neighboring Poland, so should be easier and cheaper to extract, KPMG said, citing geological studies.

Chevron will assist LL Investicijos UAB, the Lithuanian company it half owns, with well design and seismic exploration.

“Our first step is the assessment of what the resource potential is,” Johnson said. “At that point we report to the government and we work with the government to determine any future progress.”

Chevron recently opened an office in Lithuania, he said.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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