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Shale Development in Ukraine

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Ukraine has an estimated 42 trillion cubic feet (tcf) of technically recoverable shale gas reserves, according to the U.S. Energy Information Administration (EIA),1 ranking its deposits as the fourth largest in Europe behind Poland (187 tcf), France (180 tcf) and Norway (83 tcf). The most promising shale reserves appear to be in the Lublin Basin, which extends from Western Ukraine into Poland, and the Dnieper-Donets Basin in the East (which borders Russia). However, the full extent of these reserves is yet to be proved.

Map of Shale Gas Basins in the Ukraine and Eastern Europe

Source: U.S. Energy Information Administration: World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States (April 2011)

There are strong reasons for Ukraine to develop its shale gas resources, the most important being to diversify its energy sources away from Russia with which Ukraine has a long-running history of pricing disputes that have frequently spilled into the political domain.

Shale gas is not yet commercially produced in Ukraine, although drilling has commenced in one of the earliest operations, led by Polish company Kulczyk Oil Ventures in a license area it acquired in June 2010. Unlike most European countries, there has been limited public opposition to shale gas projects (at least according to the local media). This means that one of the biggest obstacles to shale gas development is noticeably absent in the country.

However, there remains significant uncertainty as to how subsoil licenses will be awarded for shale gas. At present, there is no specific legislative framework for shale gas exploration and production in the Ukraine, which instead falls within the scope of laws for conventional hydrocarbons, principally the Oil and Gas Act. To sidestep legal uncertainties in relation to shale gas E&P, the government has proposed the use of production sharing agreements (PSAs), which have historically been used alongside licenses.

Even so, shale gas reserves are part of the government’s future development plans. On May 20 2011, the president of Ukraine enacted a law amending the National Programme for the Development of Minerals to, among other changes, include shale gas reserves.2

For more information on shale development activity and regulation in Ukraine, sign up to gain access to our Premium Content here.

Useful Resources

1 EIA Report, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, April 2011
2 See

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