12/05/08

Ukrainian Economy

Ukraine to Explore Black Sea Shelf for Oil and Gas

By Oleg Lavrentyev, Nova Mova International Programs Manager, from Internet sources.

Ukraine Prime Minister Yulia Tymoshenko announced recently that the Ukrainian government would organize an effort to prospect for natural gas and oil off the country's Black Sea coast.  The exploration effort would be centered on areas near the east Crimean city of Kerch.

The announcement indicates the government’s strong desire to develop domestic energy sources and lessen its dependence on foreign sources of critical energy supplies, especially from Russia.

Tymoshenko stressed that Ukraine must commit to a large-scale, long-term exploration project and that it long-term loans from world financial institutions will be required to make the project feasible.  She added that Ukraine should develop these energy resources on its own, independent of cooperation with any foreign companies.

The Ukrainian government has attempted in the past to organize exploration work in this area, most recently in partnership with an American company, Vanco Energy; however, political infighting, primarily between Tymoshenko and Ukrainian President Viktor Yushchenko, scuttled the project.

The natural gas deposits in the Kerch area are estimated at 10.8 billion cubic meters (m3).  Such reserves would allow Ukraine to increase its annual gas production by four billion m3, and oil production by three million tons.  Currently, Ukraine produces only about 20 billion m3 of gas and four million tons of oil a year, which accounts for only 20 percent of its annual consumption.

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