OREANDA-NEWS. February 01, 2013. Cooperation with Shell in shale gas production in the next five years could allow Ukraine to fully support itself gas. This was started by Minister of Energy and Coal Industry Eduard Stavytskyi at a briefing at the Government House.

The minister recalled that a production sharing agreement recently was signed, which will be produced within Yuzivska gas field with the Royal Dutch Shell plc. From the Ukrainian side the agreement was signed by the Minister of Energy and Coal Industry Eduard Stavytskyi, from the Royal Dutch Shell plc - the company’s chief executive, Peter Voser. The signing ceremony was attended by the President of Ukraine Viktor Yanukovych and Prime Minister of the Netherlands Mark Ruth.

According to Eduard Stavytskyi energy future of Ukraine the future belongs to unconventional gas. 2 years ago in Davos, the first meeting of the President of Ukraine Viktor Yanukovych and President of Shell Peter Voser was held. Then the decision was made about a possible collaboration. It took 2 years from the first meeting and Ukraine has the final deal. Namely, Shell offered to sign a contract in Davos, as, in fact, it all started in Davos.

"During this time, together with major multinational companies it has been developed form of cooperation, in particular, changes in the legislation. It was elaborated more than 20 laws and regulations, including: the Law of Ukraine "On approval of the National Program for the Development of mineral resources of Ukraine until 2030" dated on 21.04.11 № 3268-VI, regulations of the Cabinet of Ministers of Ukraine concerning conclusion production-sharing agreements. Adoption of the new Code of Ukraine on Mineral Resources will foster a more transparent investment environment in the mineral resources sphere", the Minister of Energy and Coal Industry noted.

Recall, On February 23, 2012 the State Service of Geology and mineral resources of Ukraine announced a competition for the conclusion of the production sharing agreements (PSAs), which will be produced within Yuzivska gas field (Kharkiv and Donetsk regions) in accordance with the decree of the Cabinet of Ministers of Ukraine. The total area of Yuzivska gas field is 7886 square kilometers.

There were two applicants: TNK-BP and Shell. At the time of the contest equal conditions and confidentiality for all participants had been ensured.

On the terms and pursuant to the conditions set out in the agreement, at the first phase the company assumed commitments of USD 410 million which will be spent on exploration. The first results should be prior to 2015. And proven reserves give the real picture of commercial production at this field. Under the optimistic scenario - 20 billion cubic meters of gas per year, according to the pessimistic - 10 billion cubic meters of gas a year. Shell has one of the best in the world technologies that allow extracting natural gas from tight reservoirs. When there is commercial production the volume of investment will be least USD 10 billion.

"Ukraine, according to the result of 2012 year, consumes 45-46 billion cubic meters of gas. Domestic production is about 20 billion cubic meters a year. The optimistic scenario only owing to Yuzivska gas field we can increase production in 2 times", Eduard Stavytskyi said.

"In addition, in the near future may be signed two agreements on Oleska gas field and Skifska area in the Black Sea. Contracts are now at the stage of coordination", the Minister of Energy and Coal Industry said.

Eduard Stavytskyi also said that the tender documentation of Slobozhanska area (Kharkiv region), as well as areas in Poltava and Dnipropetrovsk regions already worked out. "There will be contests on two areas of the Black Sea - Foros and Tavriya. We are in talks with major investors to develop the shallow shelf", he added.