Could Ukraine be shale’s next frontier?

There have been a number of reports on the unconventional gas potential of the Ukraine, and today’s article in the FT that Kiev is set to grant Shell and Chevron shale rights has brought the issue to the attention of more the just shale industry players.

A combination of factors seem to be pointing to the real possibility of the Ukraine leaping to the forefront of European shale production:

• The existence of sufficient reserves. The US EIA’s estimate is for 42 trillion cubic feet of technically recoverable reserves. Clearly that on it’s own is insufficient.
• Ukraine’s strong desire for energy independence from Moscow. If these reserves are brought to production, it brings a real possibility that Kiev could gain a meaningful degree of energy independence from Moscow.
• Not only that, it could transform Ukraine’s economy.

There seem to be two main opportunities: the Lublin basin, which is part of the same shale formation that’s attracting interest in Poland, and the Dnieper Donets basin (which is more CBM).

Of course any major Western investment would provide a boost to Viktor Yanukovich’s somewhat embattled administration, so they’re probably keen to develop it.

I found this article from Ryan Lijdsman helpful, though events have developed since it was written.

To make it work of course some regulatory changes and developments will be needed. Put bluntly, Ukraine needs to put in place not just “good rules for oil and gas”, but “good rules for oil and gas specifically” as one consultant put it to me. The key ingredients on the part of the operators are time, money and patience.

We await further developments with great interest.