Chevron Set to Win Lithuanian Shale Gas License

VILNIUS, Lithuania (AP) -- U.S. energy giant Chevron (NYSE: CVX  ) is poised to win a license for shale gas exploration in Lithuania, officials in the Baltic state announced Tuesday.

The license is for a field in western Lithuania, an area near the Baltic Sea where several small firms extract a tiny amount of crude oil. Last year Chevron bought a 50-percent stake in one of these firms, LL Investicijos, which owns a license to a neighboring field. Chevron officials have said they hoped to begin exploration work this year.

For Lithuania, shale gas -- a form of natural gas trapped underground in porous rock and difficult to extract -- represents a rare opportunity to decrease its energy dependency on Russia, which currently supplies all of the Baltic state's gas.

Estimates vary, but Juozas Mockevicius, head of the Lithuanian Geological Service, has said that Lithuania could have between 50 billion and 60 billion cubic meters of shale gas reserves, or about 20 years' worth of gas at the country's current consumption rates.

"I am sure that foreign companies should be encouraged to come and do the research for shale gas," Prime Minister Algirdas Butkevicius has told Lithuanian radio.

For Chevron, the Lithuanian tender represents the latest in a string of acquisitions as the company -- the second-largest investor-owned oil and gas company in the world -- aggressively boosts its international exploration business. In Eastern Europe, Chevron is also exploring for shale gas in Poland and Romania.

Mockevicius said that the winner, which will be officially announced next month, will have to invest 80 million litas ($30 million) in the new field.

Local Lithuanian residents and environmentalists are skeptical about the shale gas extraction, which is water-intensive and involves a complicated horizontal drilling procedure known as "fracking."

"We do not want somebody drilling and spoiling our land when the gas starts to flow," Jonas Nairanauskas, a resident in the western district of Taurage, told the Lietuvos Rytas daily.


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