Ukraine Says Chevron May Exit Agreement to Extract Shale Gas

Chevron Corp. may pull out of a shale-gas project in western Ukraine, further frustrating the country’s efforts to cut its dependence on Russia.

“There is information that they plan to exit” the Oleska production-sharing agreement, leaving Ukraine without any shale-gas projects, Valeriy Chaly, deputy chief of President Petro Poroshenko’s administration, told reporters today in Kiev.

The second-largest U.S. energy producer terminated the agreement because Ukraine failed to simplify taxation rules by a Nov. 18 deadline, the Kiev Post reported, citing Chevron country manager, Peter Clark. Chevron’s press service declined to comment further.

Ukraine is seeking alternative sources of natural gas as a deadly conflict simmers along its eastern border with Russia, which used to supply more than half of its gas. The drive for greater energy independence has suffered a series of setbacks since the ouster of Kremlin-backed former President Viktor Yanukovych in February.

Royal Dutch Shell Plc halted operations and withdrew all personnel from the Yuzivska exploration project field in eastern Ukraine in June, as fighting with pro-Russian separatists intensified. Earlier, Russia appropriated the potentially gas-rich offshore fields in the Black Sea after annexing the Crimean peninsula in March.

OAO Gazprom halted deliveries of natural gas to Ukraine from June to last month over a dispute on prices and unpaid bills, while also lowering supplies to neighbors such as Hungary and Slovakia to discourage them from sending the fuel back to Ukraine through reverse flows.

To compound the issue as winter deepens, the armed conflict with rebels in the industrial Donbass and Luhansk provinces, which have received aid from Russia, destroyed access to many of the country’s largest coal mines that fed its power plants.

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