SC Ukrgazvydobuvannya and Shell enter into a large-scale agreement on joint prospecting for oil and gas in Ukraine

The Hague, the Netherlands

Ukrgazvydobuvannya, a subsidiary company of NJSC Naftogaz of Ukraine and Shell Exploration and Production (Shell) have signed a large-scale agreement on joint prospecting for oil and gas in Ukraine at today’s special ceremony attended by Ukrainian President Viktor Yushchenko. Present at the signing ceremony were Bohdan Kliuk - Deputy Chairman of the Board, Naftogaz of Ukraine, Illya Rybchych - General Director, Ukrgazvydobuvannya, Jeroen van der Veer – Chief Executive, Royal Dutch Shell and Rien Herber - Vice President, Shell Exploration and Production in Europe.

The ceremony at which the agreement that describes implementation stages of the Working Program was signed took place at the Royal Dutch Shell Headquarters in the Hague. This document comes as the next significant step forward in the cooperation between NJSC Naftogaz of Ukraine and Shell after the agreement on joint exploration in the Dnipro-Donets Basin secured in May 2005. The agreement concerns an area of over 31 000 sq km. It is believed to have significant natural gas reserves.

According to the cooperation agreement, Shell is to carry out exploration on eight areas in the Dnipro-Donets Basin which are under licenses held by SC Ukrgazvydobuvannya and will have access to expected deep seated reservoir rocks (these occur deeper than the large shallow seated fields currently under development). Shell’s share in the agreement on joint operations permitted under these licenses is 50 percent (excluding the fields currently under development). In exchange Shell undertakes to acquire seismic data for the sites and drill deep exploratory wells during three years. The work is scheduled to begin this June.

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