US Official: Ukraine - Future Energy Hub of Eastern Europe

Feb 05, 2013, 09:24 ET from Worldwide News Ukraine

KYIV, Ukraine, February 5, 2013 /PRNewswire/ --

Current reforms that are taking place in Ukraine may transform the country into an important energy hub of Eastern Europe, said the State Department's Special Envoy and Coordinator for International Energy Affairs Carlos Pascual during his meeting with the Prime Minister of Ukraine Mykola Azarov. Ukraine's actions are complimentary to actions and priorities of Europe, noted the US State Department official.

During the meeting Carlos Pascual referred to the recent negotiations and agreements between Ukraine and the world's leading energy and petrochemicals companies Shell and Chevron. As a result of such cooperation in seven to eight years Ukraine may additionally obtain 25 billion cubic meters of shale gas annually, he said. According to Pascual the U.S. has substantially increased the production of shale gas which allowed them to abandon import of hydrocarbons. Interestingly, the U.S. was able to increase its shale gas production from 1% in 2005 to 35% of the total gas production in 2012. Ukraine, on the other hand, has yet to develop its shale gas reserves which have been projected to be the third largest deposits in Europe containing 1.2 trillion cubic meters of gas according to the U.S. estimates.

As Ukraine stays committed to European integration, President Yanukovych rejected Russia's offer of cheaper gas in return for closer economic and political cooperation with the neighboring countries. This and high prices for imported Russian gas force Ukraine to put an extra effort into exploring domestic gas reserves, boost local gas production, take measures to decrease domestic gas consumption as well as diversify supply routes. Interestingly, in 2012 Ukrainian metallurgy factories dropped gas consumption by a quarter - nearly 1.3 billion cubic meters - compared to 2011.

In an effort to develop domestic gas resources, Ukraine cooperates with global energy companies which will develop gas deposits in western and eastern regions of Ukraine, as well as in the deep marine shelf of the Black Sea. Namely, Shell won the right to explore gas in Yuzivske gas field in Eastern Ukraine in May 2012. In August 2012, Shell, ExxonMobil, Romanian OMV Petrom, and Ukrainian state company Nadra received joint rights to develop underwater deposits at Ukrainian deep marine shelf field under the Black Sea.

SOURCE Worldwide News Ukraine