Kiev says Shell withdraws from shale gas project in Ukraine

Ukrainian Energy Minister Volodymyr Demchyshyn confirmed here Tuesday that Royal Dutch Shell plc, the Anglo-Dutch multinational oil and gas company, had completed a procedure of withdrawal from a shale gas exploration project in eastern Ukraine.

"Shell has withdrawn from the treaty. The operations on the Yuzovska field are frozen," Demchyshyn told reporters during a media conference.

He said that Shell has pulled out of the project, whose total cost has been estimated by the government at 3.95 billion U.S. dollars, because of "unfavorable conditions on the global energy markets."

Currently, Ukraine is seeking new investors into the project, which could be profitable in the long-term perspective, Demchyshyn said.

In the early 2013, the Ukrainian cabinet and Shell approved a 50-year production-sharing agreement to explore the Yuzovska field in Kharkov and Donetsk regions with estimated reserves of more than 4 trillion cubic meters of gas.

Shell said in June it was negotiating its withdrawal from the deal as "project implementation conditions have been materially changed due to force majeure circumstances."

Since April 2014, hostilities between government forces and pro-independence rebels had been underway in eastern Ukraine, which is close to the Yuzovska gas field. On Sept. 1, 2015, a ceasefire was established in the restive areas of east Ukraine. Endit