Ukraine’s days of importing most of its natural gas from Russia’s Gazprom might be coming to a close, much to Moscow’s chagrin and Kiev’s delight. Two new energy deals—one to develop shale gas reserves with Chevron, and another to explore oil and gas projects in the Black Sea with Eni and EDF—are set to be signed next month, the FT reports.
Ukraine produces roughly forty percent of the gas it consumes, buying the rest from Gazprom in long-term contracts and at higher costs. Russia uses those natural gas exports to Ukraine as a political tool for exerting control over the former Soviet republic (Moscow has cut gas supplies to Ukraine twice since 2006).
Chevron is ready to join Royal Dutch Shell—which back in January signed a groundbreaking deal potentially worth as much as $10 billion—to develop what Ukraine’s State Service of Geology and Mineral Resources estimates to be 247 trillion cubic feet of shale gas, Europe’s third-largest reserve.
Late last week, Ukrainian President Viktor Yanukovich ebulliently predicted that his country has “attracted investors which will within five to seven years maximum double Ukraine’s domestic gas production.” That’s certainly on the bullish side of estimates, but Kiev’s willingness to aggressively court investors to develop its energy reserves must be deeply worrying for Putin. Ukraine is already making overtures toward the EU. If Moscow loses its natural gas leverage, as seems more and more likely, then Russia’s long-harbored hopes of somehow re-absorbing Ukraine will be dead in the water.
[Oil rig image courtesy of Shutterstock]