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You're reading: Shale gas deals hang on mutual guarantees

It’s been about a month since U.S.-headquartered Chevron and Royal Dutch Shell won a Ukrainian government tender for licenses to develop the vast Yuzivsky and Olessky fields for hydrocarbon reserves using shale and other unconventional exploration technologies. Even so, Ukrainian officials have not disclosed the selection criteria upon which the tender relies or how the two winners were selected. 

All participants were expecting more transparency from the government for these projects, Ukraine’s first attempt to bring in the world’s leading energy companies into potentially multi-billion-dollar exploration projects that could prove to be a game changer for the nation’s major energy challenges.
On the one hand, the unsuccessful bidders (Italy’s Eni, America’s Exxon Mobil and Russian-British TNK-BP) need assurance that the government’s decision was fair and that the winners had really offered the best conditions for investment and the state’s share in the distribution of product.

On the other hand, the winning companies are eager to proceed with the next step and sign a product-sharing agreement. Until the agreement has been signed, there are no guarantees of any obligations being fulfilled. On both sides, there remains a risk of the obligations being reviewed. 

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