Ukrgazvydobuvannya (UGV) and Shell Exploration and Production (Shell) today signed a wide-ranging oil and gas exploration Joint Activity Agreement (JAA) at a special ceremony attended by Ukraine President Viktor Yuschenko, Shell's press office informed ForUm.

The agreement – which covers licenses, agreed work programme levels and the terms of joint activities – was signed at a ceremony held at Royal Dutch Shell’s headquarters in The Hague. Joining President Yuschenko at the ceremony was National Joint Stock Company NaftogazUkrainy (NAK) Deputy Chairman Bohdan Klyuk, UGV Chairman Ilya Rybchych, Chief Executive of Royal Dutch Shell, Jeroen van der Veer and Rien Herber of Shell Exploration and Production Europe.

UGV is a subsidiary of NAK and this JAA represents a further important milestone in cooperation between NAK and Shell following an agreement in May 2005 to carry out joint studies in the Dniepr Donets Basin, in central-eastern Ukraine. The agreement covers an area of more than 31,000 sq.kms., and is thought to contain potentially significant resources of natural gas.

Under the terms of the JAA, Shell has farmed-into eight UGV held licenses in the Dniepr Donets Basin with access to deep potential reservoirs, which partly lie beneath large scale shallower fields already in production. Shell will acquire a 50% interest in the JAA covering these licenses (excluding the producing fields) in exchange for a commitment that comprises acquisition of seismic data and drilling of deep exploration wells over a three-year timeframe. Work is planned to commence in June 2006.

Under the terms of this agreement, Shell will initially invest USD 100 mln in the local oil industry.


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