Royal Dutch Shell has signed a 50-year contract with Ukraine which is sized up as the biggest contract ever for European shale-gas. Ukraine boasts the third largest shale-gas deposits in Europe at an estimated 1.2 trillion cubic meters. The USD 10 billion deal is considered by Ukraine as a significant step toward reducing their reliance on imported natural gas, and will help shore up positive relations between Ukraine and the E.U.
According to the agreement, Shell and Ukrainian state company Nadra Yuzivska have equal shares in the enterprise - 50 percent.
"A new project has been born. This is just the beginning, we shall continue this cooperation," commented Ukrainian President Viktor Yanukovych at the January 24 signing of the agreement in Davos, Switzerland. The document is supposed to promote investment to Ukraine, help increase domestic gas production, create jobs, lift the economy, and boost state budget revenue.
Ukraine is putting extra effort into exploring domestic gas reserves due to high prices for imported Russian gas. As the country stays committed to European integration, Yanukovych rejected Russia's offer of cheaper gas in return for closer economic and political cooperation of the neighboring countries.
Shell won the right to explore gas in the Yuzivske gas field in Eastern Ukraine in May 2012. In August 2012, Shell, ExxonMobil, Romanian OMV Petrom, and Ukrainian state company Nadra received joint rights to develop underwater deposits at a Ukrainian deep marine shelf field under the Black Sea.