Ukraine holds talks with ExxonMobil, Halliburton, Chevron to increase domestic gas production

The Financial Times reported the information. 

According to the British outlet, Naftogaz has held talks with ExxonMobil, Halliburton, and Chevron on projects in war-torn Ukraine as Kyiv seeks to bring back foreign investment in its energy sector.

"The negotiations with big US fossil fuel players are part of a strategic push to increase natural gas production that Ukrainian officials believe could help replace Russian supply to Europe in the years ahead, and come after months of Russian bombardment of Ukraine’s energy network," the FT noted. 

Naftogaz Executive Director Oleksiy Chernyshov said he had held meetings in Washington with Halliburton and ExxonMobil in recent days and confirmed that he had met with Chevron executives in January.

"We understand that it’s rather hard for the private companies to step in during the war,” he told the Financial Times. “We are working on insurance mechanisms to protect their equity. For sure, it will take some time. But we don’t wait — we go ahead," Chernyshov said. 

He added that in recent days he has also met with White House officials, members of Congress and senators from both parties in an effort to garner more political support for US investment in Ukraine's energy sector.

"Ukraine has long touted its upstream potential, emphasising the near-term prospects for shale and unconventional production increases onshore in Kharkiv, Poltava and Transcarpathia, in the country’s west. Naftogaz said it hopes to tap US expertise in the kind of onshore shale drilling that has made America the world’s biggest oil and gas producer," the FT reminds. 

The outlet notes that Ukraine's falling energy demand amid economic turmoil following Russia's invasion means the country may also have reserves of natural gas that could be transported to Europe, as well as storage facilities that could be used when sufficient reserves are accumulated ahead of winter.

Naftogaz hopes to sign a contract with Halliburton soon to help boost gas production to 13.5 bcm this year, about 1 bcm more than in 2022. 

However, Chernyshov noted that it is difficult to achieve the long-term production goal by the end of the war.

"It’s a lot. And in order to achieve it we might need serious service expansion and technological drivers that Halliburton is capable to provide. We want them to expand [their presence] dramatically," Chernyshov said. 

The FT notes that the talks with Exxon and Chevron are at an early stage and will take more time to reach results. 

Naftogaz said it is open to a number of different arrangements.

"We will welcome them. We can do joint production on gas together, PSA agreement — production sharing agreement — they can have a licence and produce by themselves, we will welcome it," Chernyshov assured.

For now, Exxon has refused to comment on the negotiations with Naftogaz. Chevron did not respond to a request for comment at the time of publication.

• On April 3, Naftogaz launched the most powerful gas well in Ukraine in the last 2.5 years.