Ukraine signs major shale gas contracts

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KIEV, Ukraine, May 14 (UPI) -- Ukrainian Prime Minister Mykola Azarov said Chevron and Royal Dutch Shell were approved for the development of two shale natural gas fields in the country.

The two supermajors aim to invest at least $370 million in the development of the Yuzivske and Oleske shale fields in Ukraine.

"Chevron and Royal Dutch Shell have been chosen as winning bidders for Yuzivske and Oleske areas, which have enormous gas reserves," Azarov told Euronews.

Azarov said the fields could satisfy as much as 10 percent of the domestic natural gas demand by 2020.

Ukraine gets the bulk of its natural gas from Russia. At roughly $400 per 1,000 cubic meters, the standard unit-volume for natural gas purchases, Kiev is struggling financially, however.

The U.S. Energy Information Administration estimates Ukraine has around 42 trillion cubic feet of shale gas reserves, putting it in the No. 3 spot among European countries.

Kiev, however, said the Yuzivske field has an estimated 70 trillion cubic feet while Oleske could contain as much as 53 trillion cubic feet of shale natural gas.

The country's state geological service said production from the two sites could begin by 2018.