Shell ends talks with Ukraine on Black Sea gas

KIEV (AFP) - Anglo-Dutch oil giant Shell said on Wednesday it has ended talks with Ukraine and US group ExxonMobil on extracting natural gas in the Black Sea off the coast of crisis-hit Crimea.

In September, then president Viktor Yanukovych said Ukraine had reached a production-sharing agreement with a consortium including Shell, ExxonMobil and state-owned Nadra Ukrainy to tap gas from the Skifski site in the Black Sea.

Prior to the popular uprising that toppled Yanukovych last month, Ukraine had been seeking to diversify its reliance on Russia for energy.

Shell said in a statement that it terminated negotiations on the Skifski project in January.

"Shell had hoped to sign this in 2013 or 2014 but it was not possible. The group has decided to focus its efforts and capital on projects in the world," Shell said.

The statement did not further explain Shell's decision or say what this meant for the project itself.

But it noted that the decision did not call into question Shell's participation in other projects in Ukraine, including for the exploration of shale gas in the east of the country.

Ukraine draws gas off Crimea, but the pro-Russian authorities who seized control of the peninsula plan to "nationalise" Chornomornaftogaz, the main energy company in Crimea.

Chornomornaftogaz has oil and gas exploration and extraction operations in the Black Sea and Sea of Azov. In 2012, it extracted some 1.2 billion cubic metres of gas.

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