Two energy behemoths Royal Dutch Shell plc (RDS.A - Analyst Report) and Chevron Corporation (CVX - Analyst Report) have been awarded the exploration rights for two shale gas fields – Yuzivske and Oleske – in Ukraine. The total investment for the project is projected to be around $170 million for the Oleske field and $200 million for Yuzivske, totaling $370 million.

Per the reports of the Ukrainian state geological service, the Oleske field that spans over 2,316.6 square miles is estimated to hold about 3 trillion cubic meters of conventional and unconventional, as well as condensed gas deposits. The other field Yuzivske is likely to have a reserve of 4 trillion cubic meters of gas.

Together the fields, where industrial extraction of gas is expected to begin in 2018-2019, will contribute up to Ukraine’s 10% domestically consumed natural gas by 2020.

Apart from Shell, Exxon Mobil Corp. (XOM - Analyst Report), and TNK-BP had also forwarded their bids for the development of the eastern Ukraine located Yuzivske field. To obtain rights to set up gas production at Oleske, Lviv region, Chevron edged out the other bidder Eni SpA (E - Analyst Report).

This move highlights Ukraine’s attempt to capitalize on the booming shale gas scenario and develop its large untapped resource of shale gas. The establishment of a strong domestic gas industry will also minimize the country’s dependence on Russia.

San Ramon, California-based Chevron is engaged in global oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

The Royal Dutch Shell plc owns one of the largest integrated oil and gas businesses in the world. The group has operations all over the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources, and other energy related businesses.

Chevron and Shell, both, currently retain a Zacks #3 Rank that implies a short-term Hold rating for a period of one to three months. We are also maintaining long-term Neutral recommendation on the stocks.