Oct. 27 (Reuters) - BP's Russian joint venture, TNK-BP, is expected to sign a memorandum on shale gas exploration in Ukraine, the Russian government said on Wednesday, as BP's Russian joint oil venture seeks to increase its exposure to gas.
TNK-BP is expected to sign a memorandum on shale gas exploration in Ukraine, the Russian government said on Wednesday, as BP’s Russian joint oil venture seeks to increase its exposure to gas.
Government press service documents seen by Reuters said TNK-BP will explore for shale gas in Ukraine’s eastern Donetsk region. The company already owns a refining business in Ukraine.
One of TNK-BP’s billionaire shareholders, German Khan, told Reuters the company plans to plough between $1 billion and $2 billion into the project in next 25 years ‘if conditions are favourable’.
He also said that TNK-BP is hoping to produce some 5 billion cubic metres of shale gas — natural gas trapped in layered rock, rather than porous reservoirs — in 5 to 7 years.
The company, Russia’s fourth-largest oil producer, is looking to grow its natural gas business, but suffered a setback after it decided to initiate bankruptcy proceedings over its huge Kovykta gas field in Eastern Siberia.
TNK-BP had initially agreed to sell Kovykta to Russia’s energy giant Gazprom for around $1 billion to cover its investment costs.
But the deal fizzled out after Gazprom’s finances became stretched because of the financial crisis and unclear prospects on gas exports to China.
TNK-BP’s main gas asset in Russia are its Rospan fields in Yamal-Nenets region in the Arctics. Production at Rospan grew by 12 percent in January-September 2010, year-on-year, to 1.9 bcm.
