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ExxonMobil Suspends Interest, Shell Out in Black Sea Gas Deal

Royal Dutch Shell plc and ExxonMobil Corp. have reportedly pulled out and suspended, respectively, their participation in a consortium to explore and develop an offshore natural gas field in the Black Sea due to the ongoing crisis in Ukraine.

Shell and ExxonMobil, as well as Romania's OMV Petrom SA and Ukraine's Nadra, were awarded joint rights to explore and develop the Skifska gas field by the Ukrainian government in August 2012. The Ukraine Ministry of Environment and Natural Resources estimates Skifska, off the coast of Crimea, contains 7.06-8.83 Tcf of natural gas reserves.

According to reports, Shell decided in January to withdraw from negotiations to establish a production sharing agreement in Skifska. The company still plans to pursue other projects in Ukraine, including exploring tight gas formations.

Earlier this month during ExxonMobil's annual meeting, Senior Vice President Andy Swiger said the company's participation in Skifska was not moving forward because of the crisis in Ukraine.

"In the Ukraine, we maintain our interest in the Skifska license but are on hold due to current circumstances," Swiger said. Last July, ExxonMobil European exploration director Kevin Biddle said the company was preparing to explore Skifska, and planned to initially invest $325 million in Ukraine (see Shale Daily, July 16, 2013).

Skifska is adjacent to Romania's Neptune block, where ExxonMobil and Petrom have a joint venture. According to Petrom, preliminary estimates from an exploration well in the Neptune Block, Domino-1, shows it could hold 42-84 bcm (1.48-2.97 Tcf) of natural gas.

"In the Romanian part of the Black Sea we will initiate appraisal drilling on the multitrillion cubic foot Domino discovery later this year," Swiger said. "This is a highly perspective area with multiple plays and follow on potential. The Domino discovery derisks several prospects in the area, which will result in further exploration drilling plan for late 2014."

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