LONDON, May 18 (UPI) -- Junior shale explorer JXK Oil & Gas said Monday it was granted more areas for work in Ukraine, though the cost of business was still prohibitive to drilling.
JXK, which has headquarters in London, said Ukrainian authorities expanded by 13 square miles its production license in the Elizavetovskoye area, to bring the total to 40 square miles.
The company started a multistage hydraulic fracturing operation in Ukraine in 2013, describing it as likely the largest operation of its kind in Europe to date. The company said it was pleased with the license expansion, but was unable to continue with operations in the country.
"This further award is recognition of our ability to develop the potential of our Ukrainian licenses," JKX Chief Executive Paul Davies said in a statement. "However, we have been forced to suspend drilling operations in Ukraine because of the current punitive levels of production tax and restrictive currency controls."
In January, the company said the economic climate in Ukraine was no longer conducive to continue investing in shale natural gas opportunities. In February, it started arbitration proceedings against Ukraine under a bilateral investment treaty between the British and Ukrainian governments.
The following month, however, it said it received consent from Kiev to start work after a decree expired that required companies working in the industrial sector to get their natural gas only from state-controlled gas company Naftogaz.