Shell will extract unconventional gas in Ukraine in what will be its first big project with a large multinational company in the oil and gas sector with Chevron likely to follow suit.
With the help of the multinationals and new domestic projects, Ukraine hopes to drastically cut its dependence on Russian gas by the time the contract with Gazprom runs out in 2019.
Shell and Ukraine signed a 50-year production sharing agreement for Shell to extract shale gas from Yuzivske field in the eastern Ukrainian regions of Donetsk and Kharkiv. Shell and the state company Nadra Yuzivska will each have 50% control. Investment in the project may eventually exceed $10 billion. It should be possible to extract at least 7–8 Bcm of gas from Yuzivske in five years’ time, possibly as much as 20 Bcm. If so, Ukraine will produce more gas than it consumes. Work on the field will start in March.