Ukraine signed an offshore oil and gas production sharing agreement with Italy’s Eni and France’s EDF Wednesday that could lead to investment of up to $4 billion.

The western Black Sea’s shallow shelf could produce up to 3 million tonnes of oil a year, Energy Minister Eduard Stavytsky said, according to the Ukrainian news agency UNIAN.

Ukraine uses about 5 million tonnes of oil per year. It imports 1.5 million tonnes a year, mostly from Russia, Reuters said.

The production sharing agreement covers 1,400 square-km area in waters off Western Crimea. The area includes the Subbotina oil license as well as the Pry Kerch block, Eni said.

Eni, which already has a shale gas deal in Ukraine, said it would be the operator in the venture with a stake of 50 percent, Reuters said.

France’s EDF holds 5 percent in the deal; state-controlled firms Vody Ukrainy and Chornomornaftogaz will have 35 percent and 10 percent respectively.

Last week, the European Union said Russia used economic pressure over fuel supplies to force Kiev to cancel a planned signing of a free-trade agreement with the Western nations.

Ukraine signed a $10 billion shale gas production-sharing agreement with Chevron earlier this month, which followed a $10 billion gas exploration deal with Royal Dutch Shell.

“The two shale projects could provide Ukraine with up to 16 billion cubic meters (bcm) of gas a year by 2020, according to projections by the Kiev government,” Reuters said.

Russian gas costs Ukraine $400 per thousand cubic meters under a 10-year agreement signed in 2009.

The average European price for Russian gas is about $370 per thousand cubic meters, Ukraine authorities have said.

On Wednesday,Russia’s Rosneft and Eni signed a heads of agreement in the presence of the Russian President, Vladimir Putin, and Italy’s Prime Minister, Enrico Letta, for “joint participation and investments in logistic and commercial activities within the hydrocarbons sector.”


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