Countries in Eastern Europe look set to reduce their dependence on Russia for their energy needs following breakthrough deals on the exploration of unconventional gas exploration.
Ukraine has signed a deal with Royal Dutch Shell to explore for shale gas resources, while both Romania and Lithuania gave political backing to the exploitation of unconventional gas reserves.
The Shell-Ukraine deal was signed on the sidelines of the World Economic Forum in Davos and is reportedly worth $10 billion. It is a 50-year production sharing agreement between Shell and Ukraine's Nadra Yuzivska.
Ukraine is thought to have some of the largest reserves of shale gas in Europe and a successful drilling programme would have a major impact on its energy security.
"Unlike Poland which is more coal dependent, gas consumption in Ukraine forms a significant part of Ukraine's energy mix, accounting for over 40 per cent of energy consumption," said Peter Kiernan, energy analyst at the Economist Intelligence Unit. "A significant reduction in Ukraine's reliance on Russian gas imports would impact Russia's energy export prospects, and probably hasten Russia's efforts to develop markets in Asia.
"It remains to be seen what Ukraine's actual shale gas resource potential actually is however, of which we will have a better idea once exploratory drilling starts."
In early February Romania reversed a freeze on 'fracking', the method used to extract shale gas. Just a few days later Lithuanian president Dalia Grybauskaite gave support to shale gas exploration.
Romania has issued planning certificates to Chevron to explore for shale gas in eastern parts of the country. The US-based oil firm won a tender in 2012 to explore three shale gas blocks in Romania but work was suspended after protest from environmentalists prompted the government to impose a moratorium on fracking.
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