1 Fracking – An Alternative to Alternatives? Ukraine Irina Paliashvili, RULG-Ukrainian Legal Group Kiev and Washington, D.C. According to international experts Ukraine may hold the largest Shale Gas and Tight Gas reserves in Europe. The legislation of Ukraine and the Government were not prepared for this opportunity, but are now catching up! Until recently Shale Gas was not even included in the list of natural resources of national significance, but now it is added to this list. It is also added, along with other Unconventional Hydrocarbons, to the list of natural resources eligible for Production Sharing Agreements (PSAs). 1

2 Fracking – An Alternative to Alternatives? Ukraine There is no special legislation applicable to Shale Gas (and to other Unconventionals), but recently special provisions were added to the oil & gas, subsoil use and PSA legislation. In particular, in a PSAs made for Unconventional Hydrocarbons the parties can establish specific provisions, which may differ from the legislation applicable to conventionals, and which will prevail in case of a conflict. At the same time not much attention is paid to regulating the environmental aspects of Shale Gas development, while this issue became very political. 2

3 Fracking – An Alternative to Alternatives? Ukraine The Government is hoping that development of Shale Gas and other Unconventionals will contribute to energy independence of Ukraine and encourages foreign investment. Two PSA Tenders already took place in 2012, with one PSAs for Yuzivska area signed with Shell, and the other one being negotiated for the Olesska area with Chevron. The announcement of a new PSA Tender for Slobozhanska area is expected soon. A joint project between NAC Nadra and Eni and Cadogan is under way for Shale Gas development in Western Ukraine for the total area of 3.8 square kilometers. 3