Shell Ends Talks With Ukraine on Black Sea Gas

Shell Ends Talks With Ukraine on Black Sea Gas

Shell has ended talks with Ukraine and ExxonMobil on extracting natural gas in the Black Sea off the coast of crisis-hit Crimea.

KIEV, Ukraine -- Anglo-Dutch oil giant Shell (IW 1000/1) said today it has ended talks with Ukraine and U.S. group ExxonMobil (IW 500/1) on extracting natural gas in the Black Sea off the coast of crisis-hit Crimea.

In September, then-president Viktor Yanukovych said Ukraine had reached a production-sharing agreement with a consortium including Shell, ExxonMobil and state-owned Nadra Ukrainy to tap gas from the Skifski site in the Black Sea.

Prior to the popular uprising that toppled Yanukovych last month, Ukraine had been seeking to diversify its reliance on Russia for energy.

Shell said in a statement that it terminated negotiations on the Skifski project in January. It said it had hoped to sign the deal in 2012 or 2013.

"Regrettably this has not been achieved," Shell said. "Therefore, Shell has decided to focus its efforts and capital on other opportunities in our worldwide portfolio."

Shell said the decision has no influence on its other businesses in Ukraine, including its tight gas exploration ventures, and that it remains committed to unlocking Ukraine's domestic hydrocarbon resources "in an environmentally, socially and economically responsible way."

The statement did not further explain Shell's decision or say what this meant for the project itself.

In an email statement, ExxonMobil said, "We remain interested in the license, but are on hold due to current circumstances."

Ukraine draws gas from Crimea, but the pro-Russian authorities who seized control of the peninsula plan to "nationalize" Chornomornaftogaz, the main energy company in Crimea.

Chornomornaftogaz has oil and gas exploration and extraction operations in the Black Sea and the Sea of Azov. In 2012, it extracted some 1.2 billion cubic meters of gas.

Copyright Agence France-Presse, 2014

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