Copyright © 2012 by K&L Gates LLP. All rights reserved.

November 8, 2012

3rd Panel Shale gas – Prospects in Europe (EU, Ukraine, Lithuania, Latvia)

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UKRAINE

According to international experts Ukraine may hold the largest Shale Gas reserves in Europe.

The legislation of Ukraine and the Government were not prepared for this opportunity, but are now catching up!

Until recently Shale Gas was not even included in the list of natural resources of national significance, but now it is added to this list. It is also added, along with other Unconventional Hydrocarbons, to the list of natural resources eligible for Production Sharing Agreements (PSAs).

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UKRAINE

There is no special legislation applicable to Shale Gas (and to other Unconventionals), but recently special provisions were added to the oil & gas, subsoil use and PSA legislation. In particular, in a PSAs made for Unconventional Hydrocarbons the parties can establish specific provisions, which may differ from the legislation applicable to conventionals, and which will prevail in case of a conflict.

At the same time not much attention is paid to the environmental aspects of Shale Gas development.

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UKRAINE

The Government is hoping that Shale Gas development will contribute to energy independence of Ukraine and encourages foreign investment. Two PSA Tenders already took place in 2012, and PSAs are now being negotiated for the Olesska area with Chevron and for Yuzivska area with Shell. The announcement of a new PSA Tender for Slobozhanska area is expected soon.

A joint project between NAC Nadra and Eni and Cadogan is under way for Shale Gas development in Western Ukraine for the total area of 3.8 square kilometers.

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