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Ukraine may sign $1bn deals with international energy majors

Posted by Editor on Sunday, 25 September 2011 18:27 | Published in News
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Ukraine may sign gas production contracts worth a total of $1 billion with international energy companies including ExxonMobil,  Eni and Total this month, Kommersant Ukraina business daily said on Friday.

ExxonMobil wants to produce shale gas, while Eni and Total are interested in deposits which are hard to explore, a Ukrainian Energy and Coal Production Ministry source told the paper. This month the Ukrainian authorities signed an $800 million contract with Royal Dutch Shell for geological exploration and production of shale gas in the east of the country.

 

"We hope that the agreement will allow us to triple domestic gas output in two to three years," the source told Kommersant Ukraina.

Ukraine, unhappy with its dependence on Russian gas, is seeking alternative energy sources, including shale gas.

Ukraine is seeking to review gas deals with Russia, saying its 2009 contract's gas price formula is unfair. Moscow has tied the price for gas to the international spot price for oil, which have risen strongly since that year due to the instability in the Middle East. Ukrainian Prime Minister Mykola Azarov has said Ukraine was ready for compromise.

Ukraine's President Viktor Yanukovich is in Moscow and due to meet with President Medvedev and Prime Minister putin later today.

Ukraine's internal gas production stands at about 20 billion cubic meters. It imported 40 bcm from Russia last year. Industry analysts say that Ukraine holds Europe's largest reserves of shale gas and can produce 7 to 10 bcm a year of it.

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