Shell bets big on Ukrainian shale gas

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DAVOS, Switzerland, Jan. 25 (UPI) -- Shell Chief Executive Officer Peter Voser said there is significant shale natural gas potential in Ukraine.

Voser told the BBC on the sidelines of the World Economic Forum in Davos, Switzerland, that Shell signed a 50-year production sharing contract to explore shale natural gas reserves in Ukraine.

Ukraine is among the Eastern European countries eyeing potential shale gas reserves along with Poland and Lithuania. Voser said his company expected to make billions of dollars in investments in Ukraine should shale exploration prove fruitful.

"We go where the resources are and we see a lot of potential in Ukraine," he said.

He added that his company was capitalizing on a political situation where Kiev was looking to secure more energy independence from Russia. It's an opportunity for Shell to diversify its portfolio as well, he said.

The contract was agreed to on the sidelines of the economic summit. It's reportedly worth about $10 billion.

Russian energy company Gazprom in 2009 cut gas supplies to Ukraine because of contractual disputes. That row left downstream European consumers in the cold for weeks as the bulk of Russian natural gas designed for the region heads through Ukraine's gas transit system.

The government estimates that Shell is targeting an area said to contain about 4 trillion cubic feet of shale natural gas.