Royal Dutch Shell halts its operations in Ukraine

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Royal Dutch Shell Plc has halted drilling for shale gas in eastern Ukraine amid the civil unrest in the country.

In an interview with Bloomberg TV in London, Simon Henry, the Royal Dutch Shell Chief Financial Officer said that the company is taking ‘time out’ on exploration work in Ukraine to protect its personnel from clashes between pro-Russian separatists and the Ukrainian army.

“We obviously need to assess the future security situation as it develops because the safety of our own people is our first priority,” Simon Henry said. “There’s no pulling out, but we take a time out on the actual drilling activity on the ground,”

Royal Dutch Shell has an exploration license for the 8,000-square-kilometre (3,100-square-mile) Yuzivska field, in the eastern part of the country. The company started drilling in 2013, with pilot testing scheduled for 2015, and industrial mining for 2017. Predicted resources of the Yuzivska field are valued at 4.054 trillion cubic meters of gas.

Shell is not the only country with high stakes in Ukrainian energy resources. American giant Chevron has also signed a production-sharing agreement with the ousted President Viktor Yanukovych. Chevron’s chief executive John Watson last month told Reuters that his company remained interested in developing shale gas deposits in Ukraine, noting that “it would be good for the country”. Chevron, however is less exposed to the country’s political uncertainties, as their interests lie in the Olesska field in western Ukraine.

Across the border, there will be no disruption to exploration in Russia, where Shell is searching for shale oil and plans to expand the Sakhalin-2 gas project. Other energy majors are also keen to get their foothold in the hydrocarbon-rich country. Only last week, BP and Total defied sanctions by signing unconventional gas and oil exploration deals with Rosneft and Lukoil respectively.

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