23.12.2010
Naftogaz and Gazprom sign CBM JV memorandum

Naftogaz (NAFTO) and Gazprom (GAZP RU) yesterday signed a memorandum to create a JV to extract coal-bed methane gas (CBM) in Ukraine, Interfax reported. The two sides still need to hammer out most of the actual details of the JV.

BG Capital, Vladimir Nesterenko: Ukraine’s Donetsk region reportedly contains a huge CBM resource potential of approximately 11.5 trillion cubic meters, and full-scale CBM production could substitute up to 1/3 of Ukraine’s annual gas imports. That could well help reduce the country’s currently dramatic dependence on Russian gas supplies and prop up Ukraine’s geopolitical leverage. Currently, coal mines use CBM mainly in boilers to produce heat, while gas emissions into the atmosphere amount to roughly 2 bcm a year. Activity in the CBM segment has visibly intensified this year: TNK-BP considered investing US$ 100mn into CBM projects in Ukraine, Shell and Chevron, according to the government, also expressed an interest in developing CBM projects, and EuroGas, a small Austrian-Ukrainian player working in Ukraine with TSX Venture-listed 3P International Energy (DOH CN), landed several licenses in the Dnipro-Donets basin.

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