A company set up by investment fund Emerstone Energy has won a contract for shale gas exploration in Ukraine, after Royal Dutch Shell Plc (NYSE: RDS.A) withdrew as separatist violence erupted in Ukraine's east.
State company Nadra Ukrainy on July 27 named Yuzgas BV as the winner of the tender.
Shale would help Ukraine's ambitions to cut its gas purchases from Russia. Relations between the two plunged after Moscow's 2014 annexation of Crimea.
The Yuzivska Field of 7,800 sq km (3,012 sq miles) could, according to preliminary estimates, yield about 8-10 billion cubic meters (Bcm) of gas per year.
It is located in the Kharkiv and Donetsk regions in areas bordering territory seized by pro-Russian separatists. Since 2014 the conflict there has claimed more than 9,400 lives.
Ukraine in 2015 produced about 20 Bcm of gas and imported 16.5 billion.
"In circumstances of falling world oil prices Ukraine sharply reduced the search of hydrocarbons," Nadra Ukrainy said in a statement without giving an exact amount of planned investments. "That is why it is important that the winner committed to invest several hundred million dollars into the program of geological exploration at the Yuzivska site."
Yuzgas BV says on its website it was set up specifically for the tender by Emerstone Energy, owned by Emerstone Capital Partners.
The latter was founded by Jaroslav Kinach, head of a private Canadian company Iskander Energy Corp. and a former Ukraine country head of the European Bank for Reconstruction and Development.