Investment Potential for the Politically Savvy
Deborah is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
An interesting country to consider especially when it comes to energy companies and markets is Ukraine. There are countless and innumerable possibilities to consider when it comes to energy. Ukraine has asked the west to help them develop their domestic energy supplies. In fact some of the nation’s political drama relates to Ukraine’s need to get away from the hulking, controlling bear: Russia. The EU is interested in helping further development, especially after Russia cut off gas supplies during a dispute in 2009. (KPMG estimates that 69 percent of all the gas consumed in Central and Eastern Europe is imported from Russia.) Additionally, Ukraine has been working with the burden of getting two thirds of their natural gas from Russia which will average $415 per thousand cubic meters this year. Prime Minister Yanukovych is interested in reopening pricing negotiations with Russia, which he is bound to do because of the contract that former Prime Minister Tymoshenko signed.
Ukraine has around 42 trillion cubic feet of shale gas according to the U.S. Energy Administration, which makes it No. 3 in Europe for gas supplies. TNK-BP Holding BP.LN PLC plans to invest about $1.8 billion in shale projects at an estimated six sites around the country. As of June, Italy’s Eni SpA (LSE: SPA) paid an unstated amount for a stake in Westgasinvest LLC (Ukranian), which has about 1,500 square miles of land with potential shale-gas reserves. Chevron (NYSE: CVX) is negotiating with Ukraine on a production sharing agreement on more than 6,250 square miles of Central European potential shale gas leases. The Chevron – Ukraine agreement will probably be signed by November. Investors will also want to note that the Ukraine chose to allow a consortium run by ExxonMobil (NYSE: XOM) and Royal Dutch Shell (LSE: RDSA) to look into the Skifska natural gas field in the Black Sea.
According to The Washington Post: Chevron and Royal Dutch Shell will invest $370 million into the development of natural gas in Ukraine. As for Italy's Eni SpA they "signed a Share Purchase Agreement with Ukrainian state-owned National Joint Stock Company Nak Nadra Ukrayny and Cadogan Petroleum Plc to acquire a 50.01% interest and operatorship of the Ukrainian company LLC WESTGASINVEST" according to their own press release. This means these companies investments will be tied to whether or not Ukraine stays a good distance politically from Russia. Russia will try to thwart the development of the gas fields which would be a loss for these companies on their investments. If and when Ukraine signs their agreement with the EU it will be a huge boon and insurance for these companies that the investments will be carried to fruition as the EU will help protect the development of natural gas.
For potential investors, a keen eye to the political situation and agreements with the EU as well as Russia are invaluable to investments on the markets with energy companies related to Ukraine.
Deborah Kay Corey is a writer, public relations strategist and blogger. She lives in Washington, DC. Her blog is at www.deborahcorey.com and receives up to 376,000 hits a month.
Deborah Kay Corey is a writer, blogger and public relations strategist.She has no positions in the stocks mentioned above. The Motley Fool owns shares of ExxonMobil. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!