ExxonMobil and Shell have been approved to begin a major oil exploration programme in Ukraine, as the Kiev government looks to wean itself off Russian hydrocarbons, according to a report in today’s Financial Times.
The Ukraine government formally tendered production sharing agreements for the exploration of two gas-laden large fields, named Skifska and Foroska, offshore the country’s Black Sea coast in June.
The 16,700 sq km Skifska area received two bids, one from Exxon and Shell together with OMV Petrom, a Romanian company, and Ukraine state oil firm Nadra, and another from Russian oil giant Lukoil.
Four days ago Ukraine Ecology and Natural Resources Minister Eduard Stavitsky announced that there had been no bids for the Foroska field.
The Exxon-led consortium has pledged to invest $400 million under the terms of the PSA, and is making an upfront signing premium for the field of $300 million, a welcome boost to Ukraine’s coffers.
The 16,700 sq km Skifska field could hold 4 billion cu/m of natural gas.
The government is thought to have reserved a right to use up to 20% of gas produced domestically. An attractive element of the project for the Exxon consortium is the high price of Russian imported gas, which ensure a high comparator for the consortium’s gas in a local market hungry for more supply.
ExxonMobil and OMV Petrom are exploring for oil and gas off Romania's coast.
Ukraine relies on Russia for around two thirds of its gas, and has been hit by rising prices levied by Russian state firm Gazprom over the last year. The Russian Urals crude grade has risen steeply over the last year as similar quality Iranian crude has retreated from oil markets.
The country recently turned to Shell and Chevron to begin an onshore hydraulic fracturing programme in the country, which is thought to hold significant shale gas resources.