Royal Dutch Shell and Ukrainian state-run gas and oil company Naftogaz will sign a deal on shale gas exploration in Ukraine to reduce the former Soviet republic's dependence on Russian gas, a top presidential official said on Wednesday.
Serhiy Lyovochkin, President Viktor Yanukovich’s chief of staff, said the deal should be signed on Thursday and that Shell promised to invest about $800 million in the project.
"The heads of Shell, who will sign a deal with Naftogaz, are going to meet President Viktor Yanukovich. The deal foresees that $200 million will be directed in probing and $600 million in investments," Lyovochkin told reporters.
According to Ukrainian energy officials, the nation has significant deposits of shale gas in its eastern Donbass region.
Russia’s TNK-BP last year said it also expected to sign a memorandum on shale gas exploration in Ukraine.
Ukraine, which imports about 60 percent of gas for domestic consumption from Russia, has said its neighbour’s prices are too high for Ukrainian goods to be competitive on world markets.
It paid about $350 per 1,000 cubic metres of Russian gas for the third quarter and expects that the price will jump to about $400 in the fourth quarter.
Ukraine’s Prime Minister Mykola Azarov was quoted as saying on Tuesday that the country, a top buyer of Russian gas, should reduce imports by two-thirds in coming years. Earlier this month Ukraine’s Energy Minister Yuri Boiko said Kiev planned to cut gas consumption to about 54 billion cubic metres (bcm) in 2011 from 64 bcm in 2010.
