Shale Gas Development in Ukraine: Global Context of the Problem and Prospect of Regulation

Ukraine is widely believed to be one of Europe\u27s largest holders of the new energy resource. But when working on problem, we also should take into account the experience of countries which succeed the shale gas production: USA, Canada and our neighboring countries in Europe – Poland and others. According to experts, Ukraine may be in talks with foreign investors and to remind of shale gas. Ukraine during 2011 year agreed on cooperation with 21 companies in the production of hydrocarbons, particularly shale gas and coal bed methane. Ukrainian government is very interested in shale gas exploration but experts state that Ukraine has huge political and legal risks which remain the main greatest impediment to gas investments in Ukraine. Existent laws don\u27t adequately address the new technology being used for shale gas development; the production sharing law don\u27t create enough transparency and predictability to promote investment. I must stress upon that in spite of economic benefit, unconventional gas field isn\u27t safe for adjacent territories. Population health and environmental safety as main social values should be taken into account. This region has large recreational areas, national reserves, mountain forests, high density of population and insufficient water-supply. Two main global values – human being and natural resource development - should be equally protected. How to solve the global problem of natural resources development: the balance between economic benefit and social, environmental issues of welfare of population and sustainable development principles? It\u27s in adoption of effective legislation measures and it’s successful implementation in practice. It should be based on comprehensive approach and to take into consideration environmental, social and municipal issues. The current regulation of shale gas development is accomplished by the Mineral Resource Code of Ukraine, Law of Ukraine about oil and gas, Law on Production Sharing Agreements. Also, the “List of Mineral Resources of State Importance,” approved by the Cabinet of Ministers, lists shale gas as a mineral resources of the state importance. This designation effectively places more control in the hands of the state and further reduces the influence of local governments on the regulation of shale gas development. This is reflected in many areas: lawmaking (breaking down the institute of ecological expertise as one of most important instrument of influence on hazardous activity e.g.), public involvement in important environmental decisions and others. Existing General State Program of mineral raw material development till 2030 and Law about production sharing agreements doesn\u27t give the whole picture in this sector. Local governments are not in authority to influence on language of production sharing agreements. The legal basis for that reform could be grounded in the adoption of National Program of Shale Gas Development by the Cabinet of Ministers. It will mean that the territories affected by shale gas development are under especial caution of the state and the state gives financial and other help (more rate of tax fees to local budgets, subsidies). We should also change the system of standardization and monitoring; to do clear and grounded distinctions between national and local regulatory authority; study to evaluate the threat hydraulic fracturing poses to water supplies; water, lands and air quality in rulemaking. We have been working on this issue for last 4 month and last 2 months – in collaboration with the Colorado University (USA), in request of Ukrainian government and UNEP. Our part of report focused on basic problems of local self-government participation in the shale gas development and legal regulation. So, Ukraine should expand legal opportunities for participation of local governments in the process of transferring land within their territory land to mineral use and to provide specific legal guarantees of environmental, material and social interests of the communities