Shale could make Ukraine self-reliant in gas-Shell

DONETSK, Ukraine, Feb 12 (Reuters) - Ukraine has thepotential to double or even triple its domestic production ofgas over the next 10 years and could in the future becomeself-reliant in the fuel, an official for energy major RoyalDutch Shell said on Tuesday.

The former Soviet republic is seeking ways of becomingindependent of Russia for strategic supplies of natural gaswhich are costly and often come with a political price tag.

Shell and Ukraine last month signed a landmarkproduction-sharing agreement to develop the Yuzivska shale gasfield in the east of the country and the Anglo-Dutch company isalso participating, with Exxon-Mobil, in Black Seaoffshore exploration in Skifska.

At a news conference in Donetsk in the east of Ukraine, Graham Tiley, Shell country manager, said only explorationsurveys would show the real potential of shale gas reserves ofYuzivska.

But he went on: "I believe if you look across the projectsin Ukraine - Yuzivska, Olesska, Skifska, there is the potentialfor Ukraine to double or triple its domestic production in thenext decade.

"So I think it is possible in Ukraine to get back to thelevels of production that there were in the past which wouldmake Ukraine, in effect, self-reliant in gas," Tiley said.

Ukraine produced 20.2 billion cubic metres of gas in 2012 -but required almost 55 bcm to heat its homes and power itsindustries.

The former Soviet republic has Europe's third-largest shalegas reserves at 42 trillion cubic feet (1.2 trillion cubicmetres), according to the U.S. Energy InformationAdministration.

But the real commercial volume available in Yuzivska willemerge only after exploratory surveys involving the drilling of15 wells are carried out over the next few years.

Ukrainian Energy Minister Eduard Stavytsky said last monththat Shell would spend about two years and $410 million toexplore the Yuzivska field and assess its reserves.