TNK-BP plans to invest up to USD 50 mln into shale gas exploration in Ukraine

TNK-BP plans to invest up to USD 50 mln over 2011-12 in the first stage of a shale gas exploration program in Donetsk region, Ukraine, German Han, company CEO told Interfax-Ukraine yesterday. Total investments in the project might total USD 1.5-2.0 bln over the next 25 years, he said. Ruslan Patlavskyy: We see this as fundamentally positive for Ukraine in the long-term, given the country’s 46% self-sufficiency in gas consumption as of 2009 according to BP’s statistical review. The company expects to reach annual production of 5 bln mcm of gas in 5-7 years, which is equal to 14% of Ukraine’s planned natural gas purchases from Gazprom for 2010. Despite relatively insignificant CapEx for the first stage of the project, we see the said steps of TNK-BP as a positive sign, testifying to the growing interest of multinational E&P companies in Ukrainian hydrocarbon exploration. The project became possible after a meeting of the Russian-Ukrainian economic cooperation committee, headed by the countries’ Prime Ministers Vladimir Putin and Mykola Azarov.