Hidden Motives Behind the Ukraine-Russia Conflict
Ukraine has Europe’s 3rd largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic meters).
Ukraine relies heavily on Russia for its gas imports. The EIA notes that the country produces 30% of its natural gas requirements and makes up the bulk from Russian and Turkmenistan imports. The administration states that its location makes it an important transit country for Russian gas supplies, and disputes have resulted in supply disruptions.
Shale gas discoveries are potentially changing the game. Shell has signed on to explore an area that government estimates indicate could have 113 Bcm (4 Tcf) in reserves.
The country’s gas reserves have geologic similarities to its neighbor Poland, and the Lublin basin could be 10 to 15 times the size of the Barnett shale. It also suffers less from population and water issues that plague its neighbor to the northwest. But it suffers from the same bureaucratic issues that affect many other countries with shale deposits. “Lousy domestic policy remains the single greatest impediment to gas investments in Ukraine,” said Edward Chow, a senior fellow at the Center of Strategic and International Studies.
Despite these issues, Chevron is proceeding with its plans to explore for shale in the Olesska field in the west of the country, according to Reuters. A government draft for a $10 billion shale gas production-sharing agreement has been approved. The draft will be sent to the Cabinet of Ministers for a signature, the article states. Royal Dutch Shell received a shale agreement with the government earlier this year to explore in Yuzivska in the eastern part of the country. The two projects could result in 11 Bcm to 16 Bcm (388 Bcf to 563 Bcf) within five years, according to Reuters.