Ukraine gas company Ukrgazvydobuvannya (UGV) and Shell have signed a wide-ranging oil and gas exploration agreement at a ceremony attended by Ukraine president Viktor Yuschenko.

UGV is a subsidiary of Ukraine’s state oil and gas group NAK and this latest agreement represents a further important milestone in cooperation between NAK and Shell following an agreement in May 2005 to carry out joint studies in the Dniepr Donets Basin in eastern Ukraine.

The agreement covers an area of more than 31,000 km sq, and is thought to contain potentially significant resources of natural gas, Shell said in a statement.

Under the terms of the [agreement], Shell has farmed-into eight UGV held licenses in the Dniepr Donets Basin with access to deep potential reservoirs, which partly lie beneath large scale shallower fields already in production.

Shell will acquire a 50% interest in…these licenses (excluding the producing fields) in exchange for a commitment that comprises acquisition of seismic data and drilling of deep exploration wells over a three-year timeframe, Shell said in a statement.