Chevron abruptly pulls out of exploration project

  • 2013-10-10
  • From wire reports

VILNIUS - Lithuania should revise laws on shale gas works that led Chevron Corp. to abandon its bid for exploration rights, Prime Minister Algirdas Butkevicius said, reports Bloomberg. New environmental approval procedures and plans to raise taxes on shale hydrocarbons were behind the U.S. energy company’s decision on Oct. 8 to withdraw its lone bid in a tender for exploration rights, Butkevicius said on Oct. 9.

“It’s worth a fresh look at those laws with an eye to preparing and eventually announcing a new tender,” the prime minister said on Laisvoji Banga radio in Vilnius. “I can’t say how long that might take.”
The Baltic nation wants to develop shale resources as an alternative to energy imports from Russia. Some local communities oppose the technology as environmentally unsafe. The government is negotiating with and suing Russia’s Gazprom, the country’s only natural-gas supplier, seeking to reduce what it calls “unfair” prices.

Chevron submitted the only bid in a January tender for shale-hydrocarbon exploration and production rights in the western Lithuanian region of Silute-Taurage. The U.S. company last year bought half of Lithuanian oil and gas recovery company LL Investicijos, which holds a license to explore for hydrocarbons in Rietavas, contiguous to Silute-Taurage.
“Because of the changing regulatory and legislative landscape, Chevron believes that its business interests in Lithuania are best served focusing on our existing investment in the Rietavas block,” Chevron said in a statement on Oct. 8.

Chevron was put off mainly by a legal demand that it get local government approval for an environmental impact assessment before starting exploration, Butkevicius said. It was also concerned by a proposal in Lithuania’s parliament to increase the tax rate on income from shale-hydrocarbon production to as much as 40 percent, he said.
The prime minister said he’d support a tax rate as low as 15 percent if that would help attract investments.

“Lithuania’s unfounded fears have cost it investments worth many millions, as well as new jobs and a chance to move toward energy independence,” Environment Minister Valentinas Mazuronis said on the ministry’s Web site on Oct. 9. “I hope that in the future we’ll make better decisions.”