Shell signed an agreement in January 2013 with Ukraine’s Nadra Yuzivska to explore the Yuzivka field to help reduce the country’s dependence on Russian gas imports.
The withdrawal of Yuzivska production sharing agreement (PSA) comes as the project operations have been suspended for almost a year as result of the ongoing battle between Ukraine and the pro-Russian rebels.
Financial Times quoted Shell as saying in a statement that the company was unable to perform its commitments under Yuzivska for an extensive period of time due to circumstances beyond its control, also known as Force-Majeure.
"Back in July 2014 Shell took the contractual step of declaring force majeure on some specific obligations of the Yuzivska PSA.
"The purpose of such a step was for the parties to the PSA to be notified that Shell is unable to perform certain specific activities, in the timeframe agreed under the PSA, for reasons outside of the company’s control."
The company said that the suspension has materially changed the implementation conditions of the project, which is located close scene of conflict.
Discovered in 2010, the Yuzivska field is estimated have around 70.8 trillion cubic feet of reserves and was planned to commence production in 2017.US-based Chevron had also pulled out from a $10bn shale gas agreement last year in Ukraine.
The two project developments come amidst Ukraine crises and plunging global oil prices since mid-June 2014.
