Chevron has reportedly informed Kiev that it is pulling out of its $10 billion shale gas exploration project agreed with much fanfare last year. The cancellation of this highly important energy security project comes only months after Royal Dutch Shell froze its shale gas exploration in eastern Ukraine amid the fighting there.
The agreements with Chevron and Shell were viewed as ‘‘‘game changing‘ when they were signed, because of their potential to break Kiev‘s undue dependency on Russian energy imports. Part of the explanation, at least for Chevron, is that their exploratory findings to date in Poland and Lithuania ‘‘‘ with similar geology to that of Ukraine ‘‘‘ showed lower than expected reserves. Unresolved tax issues also played a role. This negative turn of events comes against the backdrop of an IMF estimate that Kiev‘s agreed $17 billion bailout package will likely fall short by up to $15 billion.