Ukrainian Energy Minister Yury Boyko told reporters that Royal Dutch Shell will invest $800 million in geological exploration and production of shale gas in eastern Ukraine.
After signing the contract between Shell and Ukraine's Naftogaz energy company, under which Royal Dutch Shell bought the right to drill Ukraine's first 1,000 shale gas fields Boyko said, "The investment will reach $800 million. This is the first significant joint agreement which gives us an opportunity to increase gas production in our country in the nearest future," Russkoe Informatsionoe AgentsvoNovosti reported.
Boyko added that Ukraine planned to begin shale gas production by 2016 or 2018. Energy industry analysts note that Ukraine holds Europe's largest reserves of shale gas and could produce 7 to 10 billion cubic meters a year and that countries such as Ukraine and Poland could hold up to 1.5 trillion cubic feet of shale reserves. Ukrainian Prime Minister Mykola Azarov said of the Royal Dutch Shell- Naftogaz agreement, "The time will come when Ukraine will meet all of its own gas needs."
Royal Dutch Shell will begin by drilling wells four miles deep to see whether gas is trapped in Ukraine's rock formations.
By. Charles Kennedy, Deputy Editor OilPrice.com
