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Gazprom creates two joint ventures with Ukraine

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Dec. 1, 2010, 9:24 p.m. | Business — by Interfax-Ukraine
Russia's Gazprom has announced that Gazprom chief executive Alexei Miller and Ukrainian Energy Minister Yury Boiko reached agreements to set up two joint ventures to produce coalmine methane and develop the offshore Pallas natural gas field in the Black Sea. The Ukrainian Fuel and Energy Ministry in turn confirmed that the creation of such joint ventures had been under discussion at a meeting in Moscow, yet, it did not report on the agreements on the JVs' creation.

"The sides have agreed to set up two joint ventures to produce coalmine methane from the coal-beds in Ukraine and develop the offshore Pallas natural gas field in the Black Sea," Gazprom said in a statement.

"The sides also touched upon other issues of strategic cooperation under the conditions of partnership enjoying equal rights in the framework of recent agreements reached between the presidents of Ukraine and Russia in Moscow on Nov. 26, 2010," reads a statement by the Ukrainian Energy Ministry.

Gazprom's announcement was more laconic – it said that Miller and Boiko had continued discussing issues of further development of strategic partnership between Gazprom and Naftogaz.

The Ukrainian ministry also reported that Naftogaz CEO Yevhen Bakulin was present at the meeting.

The ministry said in a comment to Interfax-Ukraine that its statement was correct and contained no mistakes.

As was reported, following a meeting with Ukrainian Prime Minister Mykola Azarov, Russian Premier Vladimir Putin suggested late in April that Gazprom and Naftogaz be merged. At the first phase a joint ventures was proposed to be created on a parity basis, which would include production and transport assets from the Ukrainian side and natural gas deposits of the same value from Gazprom's side.

Early in September Gazprom's head said that Ukraine had already listed a number of companies that could assess the Ukrainian gas transport system and Russian gas fields.

The Ukrainian leadership repeatedly stressed that it was ready to set up a gas joint venture only on equal conditions and saw no grounds for a hurry in those issues.

Pallas, which lies in the northeastern part of the Black Sea and has an area of 162 square kilometers, has forecast reserves of 157 billion cubic meters and recoverable reserves of 75 billion cubic meters.

In January this year the Ukrainian government issued Naftogaz a 30-year license to develop Pallas, where gas is believed to be obtainable from depths of between 3,000 and 5,200 meters.

Ukraine estimates that its Donets Basin alone contains 11.5 trillion cubic meters of coal-based methane.

Readiness to produce coalmine methane in Ukraine and invest funds in that business was officially announced by Russian-British TNK-BP and the Industrial Union of Donbass.

According to the Ukrainian Energy Ministry, among other potential investors are British-Dutch Shell and U.S.-based Chevron.
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