Ukraine, which hopes its big shale gas reserves will help end reliance on costly imports of Russian natural gas, chose Shell last May as a partner to develop the Yuzivska shale gas field.
Deputies of the Donetsk regional council voted to approve the deal with Shell, removing one of the final hurdles to an agreement.
Ukraine is said to have Europe's third-largest shale gas reserves at 1.2 trillion cubic metres behind those of France and Norway, according to the US Energy Information Administration.
"If exploration is successful in the Yuzivska area, we will be able to produce a few billion cubic metres [bcm] of gas per year in just five-six years and eight to 10 bcm in 10 years," Environment and Natural Resources Minister Oleh Proskuryakov told the council.
