Chevron won’t pull out of Ukraine, where it signed an agreement last year to use fracking to extract natural gas in the shale rocks near the border with Poland. Though the government that signed the deal was ousted last year through mass protests, the company still has workers in the country.
The San Ramon oil giant is yet to begin drilling for the gas. Analysts told San Francisco Gate that the current Ukrainian regime has every reason to continue with the agreement. The country, which sources over 50 percent of its natural gas from Russia, desperately needs a source of income to pull it out of its dire financial straits.
“That is the best way for Ukraine to become financially solvent,” Amy Myers Jaffe, the executive director of energy and sustainability at UC Davis, said. “It’ll take a while. It doesn’t solve the immediate crisis. But it’s definitely the way forward.”
Analysts also added that Chevron is in a much better position to survive the current turmoil than other Western oil firms that are interested in the country. Royal Dutch Shell entered into an agreement with the ousted government last year to explore for gas in eastern Ukraine, an area that is predominantly populated by ethnic Russians.
While Vladimir Putin, the President of Russia, says that Kremlin has no plans of seizing eastern Ukraine, most Western nations have refused to believe his claims.
“Shell is in the east, and there’s a security risk there, but there isn’t a security risk for Chevron,” said Ander Aslund, a senior fellow at the Peterson Institute for International Economics. “They would not suffer from a Russian incursion. This (area) will be Ukraine no matter what.”
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