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Shale Gas Riches at Stake in Ukraine

This post first appeared on Russia Insider

Competition for energy resources is the unspoken story behind the Ukrainian conflict. 

With Ukraine having Europe’s third largest shale gas reserves this factor is being underestimated.

<figcaption>US companies and politicians have staked major claims</figcaption>
US companies and politicians have staked major claims

US and western energy companies have been heavily involved in Ukrainian energy and shale gas developments. 

So are some Americans with big political ties.  Hunter Biden, son of US Vice President Biden, is a member of the Board of Directors of the Ukrainian private oil and gas company Burisma. Burisma holds the rights to develop shale gas fields in Ukraine.  Biden is not the only American with political ties to have been appointed to Burisma’s board. David Leiter, former Senate chief of staff to Secretary of State John Kerry, and Devon Archer, former adviser to John’s Kerry 2004 presidential campaign, have both been signed on.  

In January of last year, Royal Dutch Shell signed a 50 years tripartite production agreement with the Ukrainian state-owned company NAK Nadra-Yuzivska and the private SPK Geosrvis. According to the agreement Shell will invest up to $50 billion to start up industrial-scale shale gas extraction in eastern Ukraine by 2017.

In November of last year, US oil and gas company Chevron signed a 50 year agreement to develop oil and gas fields in Western Ukraine.

And ExxonMobil has chosen to explore for offshore gas in the Black Sea.

With Ukraine having Europe’s third-largest shale gas reserves (1.2 trillion cubic meters according to the US Energy Information Administration) the stakes could not be higher.

The fact that most of the energy resources are located in those regions that have recently experienced unrest could be a factor in the conflict. The Dnieper Donets Basin, the region where unrest has been strongest, is Ukraine’s major oil and gas-producing region accounting for approximately 90% of production.  An important gas field is Yuzivska located in Donetsk and Kharkiv regions, the site of major unrest.  Slovyansk, where fighting in the period April to July was fiercest, lies at the heart of the Yuzivska field. 

In an interview given to a Russian newspaper, retired Ukrainian General Valery Melevanii explained his view that popular opposition to shale gas exploitation in the region is what motivates Kiev’s military action there.

By emphasizing the political sources of the conflict the media has understated the extent to which it is a straightforward natural resources grab as US backed energy firms look to expand their footprint in Europe.





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