Ukraine approved a bid by a consortium of ExxonMobil, Shell, OMV Petrom and Ukrainian state company Nadra to explore for oil and gas offshore under the Black Sea, the Financial Times reported on Wednesday.
According to the newspaper, the winning bidders pledged to invest twice as much as the $200m minimum for the initial phase of exploration of the 16,000-km2 Skifska area. In addition, they have agreed to pay more than $300m as a signing bonus next year.
The newspaper quoted three officials as saying the consortium was chosen in a tender process over Russia's Lukoil. "Big finds are expected in the Skifska field, attractive in being massive in size as well as adjacent and geologically similar to where ExxonMobil and OMV Petrom are exploring off Romania's coast," one Ukrainian government official was quoted as saying.
The fact that Ukraine teamed up with major global players is a positive signal in terms of country's investment climate. Ukraine keeps trying to reduce its dependence on Russian gas, so its understandable that Western companies had an advantage in the bidding process. "This time we think the experience of ExxonMobil and OMV at Romanian offshore structures also helped them, as the Skifska area is geologically similar to Romanian offshore fields. However, we think Lukoil could find more interesting opportunities than Ukrainian offshore exploration blocks, as the combined political and geological risks are too high relative to the size of potential discoveries, in our view," analysts of Renaissance Capital say.