Chevron Pulls Out Of $10 Billion Gas Deal With Ukraine.
Ukraine’s bid to rid itself of its dependence on Russian energy just took a huge hit.
Chevron announced that it was pulling out of a deal that it made with the Ukrainian government to develop shale gas in western Ukraine. The $10 billion deal was signed before the ouster of former Ukrainian President Viktor Yanukovych.
Chevron indicated that it was unsatisfied with the tax regime in Ukraine, after the post-Yanukovych government raised energy taxes. “We have just terminated that PSA (product sharing agreement),” said Peter Clark, Chevron’s country manager in Ukraine, according to Kyiv Post. “When it was signed, things had to be done, but not all of them got done.”
The deal with Chevron was signed in November 2013, and called for Chevron to invest $350 million over the first two to three years to develop Ukraine’s Olesska field in the western part of the country. The agreement kept open the possibility of ramping up investments to $10 billion over the course of Chevron’s 50-year lease. The Olesska field was expected to produce 10 billion cubic meters of gas each year when it was up and running.
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But Chevron insisted that it would only move forward if the Ukrainian government simplified a series of tax laws. With no action from Kyiv, Chevron has decided it cannot move forward, and informed the Ukrainian government on December 15 of its intention to pull out of the deal.
