TNK-BP to Invest $1.8B in Ukraine Shale Gas by 2017-18

MOSCOW (Dow Jones Newswires), June 24, 2011

BP's Russian joint venture TNK-BP Ltd. plans to invest $1.8 billion in unconventional gas projects in Ukraine over the next six to seven years, the company's vice president for gas and power supply Mikhail Slobodin said.

Investing $1.8 billion into six Ukrainian shale deposits until 2017 or 2018 will allow TNK-BP to produce up to 3 billion cubic meters of gas a year, with initial production lower than that, Slobodin told Dow Jones Newswires.

Unconventional gas sources such as shale gas, which has shaken up the U.S. gas market in the past two years, have caught the interest of major players on the European market. U.S. oil major Chevron has recently acquired shale gas acreage in Poland and Romania.

"Even though they had success with shale gas in the United States, it doesn't mean we will have the same success in Ukraine or Poland," Slobodin said. "No-one really knows."

Ukraine's eastern Donetsk region may hold considerable shale deposits, an unconventional source of natural gas produced by a method known as hydraulic fracturing.

TNK-BP, a joint venture between U.K. oil major BP and a group of Soviet-born billionaire investors, is targeting six licenses containing unconventional tight gas in Ukraine.

Copyright (c) 2011 Dow Jones & Company, Inc.


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