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Ukraine chooses gas partners

Ukraine has picked a consortium led by ExxonMobil and Royal Dutch Shell to develop its Skifska gas field in the Black Sea, its government said Wednesday.

Ukraine has picked a consortium led by ExxonMobil and Royal Dutch Shell to develop its Skifska gas field in the Black Sea, its government said Wednesday.

The Skifska development, the total costs of which have been estimated by the government at $10-12 billion US, is part of the former Soviet republic's plan to ease its dependence on gas imported from Russia, which last year accounted for nearly two-thirds of the country's consumption.

Skifska, predominantly a gas field, is estimated to hold reserves of 200 to 250 billion cubic metres of gas and is expected to eventually produce five billion cubic metres a year.

Environment and Natural Resources minister Eduard Stavitsky said the winning consortium, which also includes Romania's OMV Petrom and Ukrainian state company Nadra Ukrainy, would start work this year.

ExxonMobil and Shell could not be reached for comments.

As a condition of the tender, which had also been contested by Russia's Lukoil, the winner must pay the government about $300 million US after signing the 50-year production sharing agreement.

The price of Russian gas imports has been rising steadily over the past three years but Kiev's attempts to renegotiate the supply agreement have so far been unsuccessful.