Chevron told the Ukrainian government Monday it intends to back out of a $10 billion shale gas project, the latest blow to the country’s sputtering energy industry.
Ukraine’s presidential administration said it received “signals” the company wanted to pull out of the project, the Financial Times said.
Chevron reportedly cooled on its Ukraine plans after similar shale gas reservoirs in Poland and Lithuania showed disappointing reserves.
The company said it was too early to comment on the decision.
Chevron’s production sharing contract with Ukraine was set to last over 50 years with an initial exploration investment of about $350 million in the first two to three years of the project.
In June, Royal Dutch Shell halted shale gas drilling at its 3,100 square mile block in eastern Ukraine after fighting broke out between pro-Russian separatists and pro-government forces.
Shell’s project will most likely remain on the back burner until fighting in eastern Ukraine has stopped.
Both companies had anticipated spending hundreds of millions of dollars on tight gas exploration and production projects in the coming years.
Ukrainian energy minister Dmytro Marunich said the poor showing in neighboring countries and Ukraine’s precarious political and economic situations means that a shale gas boom will probably “not materialize.”