Ukraine forged ahead with diversifying energy supplies on Nov. 27 when it signed a production sharing agreement with a consortium of investors led by Italian energy major Eni to explore and develop unconventional hydrocarbons in the Black Sea.
The offshore area
slated for development is in the eastern part of the Crimean peninsula,
covering approximately 1,400 square kilometers.
According to Energy Minister Eduard
Stavytsky, investment in the project is estimated at $4 billion, and oil
production is expected to reach 2-3 million tons per year.
Eni is the operator of the joint-venture with
a 50 percent stake. France’s EDF has a 5 percent stake, along with state-owned
companies Vody Ukrainy with 35 percent and Chrnomornaftogaz with 10 percent,
both of which are fully owned by Nadra Ukrainy and Naftogaz Ukrainy.
The deal marks the
third such PSA Ukraine sealed this year. Shale gas deals worth
potentially $10 billion each were inked with Chevron and Royal Dutch Shell on
Nov. 5 and Jan. 21, respectively.
Chevron has the rights to
explore and eventually produce hydrocarbons in two western Ukrainian regions
that have an estimated 2.98 trillion cubic meters of gas reserves. Together with Shell – which will explore and
extract hydrocarbons in the eastern part of the country – Ukraine could produce
an additional 11 to 16 billion cubic meters of gas in five years’ time,
according to government projections.
Kyiv
also hopes to complete negotiations by the end of this year with an
ExxonMobil-led consortium, which includes Shell, to explore for hydrocarbons
off Crimea’s western Black Sea coast.
Ukraine currently pays more than $400 per
thousand cubic meters for Russian gas, more than any other European country.
In
2012, Eni also acquired a 50.01 percent stake Westgasinvest, a company which
currently holds rights to nine unconventional gas license areas in the Lviv
Basin, in western Ukraine, totaling approximately 3,800 square kilometers of
land.
Kyiv Post editor Mark Rachkevych can be reached at [email protected].
