Exxon Led Consortium Wins Access to Ukraine's Oil and Gas Resources

KYIV, Ukraine, August 15, 2012 /PRNewswire/ --

Four companies won the right to develop oil and gas reserves at the Ukrainian deep marine shelf field Scythian under the Black Sea, according to Eduard Stavytskyi, Ukrainian Minister for Ecology and Natural Resources. American ExxonMobil, Dutch-British Royal Dutch Shell, Romanian OMV Petrom, and Ukrainian state company Nadra will unlock the underwater deposits.

Scythian field is "massive in size" (16,698 square kilometers) and "adjacent and geologically similar to where ExxonMobil and OMV Petrom are exploring off Romania's coast," The Financial Times quotes an unnamed Ukrainian government official. The Ukrainian government chose the joint bid by four companies over the bid by Russia's oil giant Lukoil.

"Bringing in the energy majors is a paradigm shift for Ukraine's energy security and investment climate. No deals of this magnitude have yet been inked in this country," said the president of the American Chamber of Commerce in Ukraine Jorge Zukoski in his interview to the British press.

Group, led by Exxon, will pay at least USD 300 million for the right to sign a 50 year production agreement with the Ukrainian government within ten days after signing. Their bid also stipulates investing USD 400 million during the initial phase of the exploration. This is double of what the Ukrainian government was initially aiming for.

The commercial production at Scythian oil and gas field may start in six to eight years and reach three to four billion cubic meters of gas annually, informs the FT.

Ukraine is estimated to possess the fourth-largest shale gas reserves in Europe. The planned exploration projects in Ukraine are an attempt of the country to rid itself of energy dependency on Russia, according to the British paper.

In May 2012, Royal Dutch Shell and Chevron Corp obtained the right to develop Ukrainian shale gas fields Yuzivske and Oleske, respectively. The fields are expected to provide Ukraine with up to ten percent of domestically consumed natural gas by 2020.

Moreover, Ukraine began reforming its inefficient energy system by adopting the State Program on Energy Efficiency 2010-2015. Ukraine aims at reduction of domestic energy consumption through increasing energy efficiency, as well as developing domestic gas reserves, introducing green energy production technology, and diversifying gas import.

SOURCE Worldwide News Ukraine