ISSN 2330-717X

Ukraine Picks Western Firms For Offshore Gas Project

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(EurActiv) — Ukraine has selected ExxonMobil and Royal Dutch Shell to develop its Skifska hydrocarbon field in the Black Sea, choosing the American and Dutch companies over Russia’s Lukoil for the €8.15-billion project.

The Skifska offshore project is part of Ukraine’s plan to ease its dependence on gas imported from Russia, which amounted to some 40 billion cubic metres (bcm) last year and accounted for nearly two-thirds of the country’s consumption.

“Thanks to state projects aimed at increasing domestic production, we will be able to produce at least 45 bcm,” Eduard Stavitsky, the environment and natural resources minister, told Reuters after the announcement yesterday (15 August).

Ukraine
Ukraine

Skifska, predominantly a gas field, is estimated to hold reserves of 200 to 250 bcm of gas, he said, and is expected to eventually produce 5 bcm a year.

Stavitsky said the winning consortium, which also includes Romania’s OMV Petrom and Ukrainian state company Nadra Ukrainy, would start work on the field this year.

Ukraine already has an extensive gas pipeline network which could transport gas from the Black Sea coast.

Ukraine’s decision to go with non-Russian companies demonstrates that Kyiv wants to diversify its energy portfolio away from Russia, writes Stratfor, the Texas-based global intelligence company.

Because of geographic constraints and political manoeuvring from Moscow, Kyiv has few other sources than Russia for gas imports. Ukraine is exploring the development of its indigenous hydrocarbon reserves.

The Siksfa field alone could reduce the country’s natural gas imports from Russia by 10%.

“Ukraine’s deal with two of the largest, most technically capable energy companies in the world shows that Kyiv is aware of its rapidly closin window of opportunity to escape Moscow’s grip,” Stratfor says in an analysis. “Should Ukraine and its new partners fail to develop significant indigenous hydrocarbon reserves, Russia will be one step closer to obtaining control over Naftogaz and consolidating its influence over the country.”

In May, the Ukrainian government picked Shell and US-based Chevron Corp as partners in projects to explore and develop two potentially large onshore shale gas fields.

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