LONDON - Shell has confirmed its readiness to invest $100 million in hydrocarbon exploration and extraction in Ukraine under an agreement on cooperation signed with National JSC Naftogaz Ukrainy in 2005 and hopes that partnership of the two companies will become closer.

"We confirm our liabilities to invest $100 million in extraction. This is the sum that we promised to invest jointly with Ukrgazvydobuvannia [a subsidiary of Naftogaz Ukrainy]," Patrick Van Daele, the general manager of Shell Ukraine Exploration and Production, told Interfax-Ukraine in London on Tuesday.

He said at a conference dedicated to Ukraine and organized by the Economist newspaper, together with the Foundation for Effective Governance that the result of the agreement on partnership in hydrocarbon exploration and extraction signed with Naftogaz in 2005 on parity terms is very small: around $1 million has been invested.

"I see a small appetite for the partnership: progress with Naftogaz is less than we expected," Daele said. He said that the leadership of Naftogaz Ukrainy changed with each government reshuffling, so time was needed to meet with new managers and convince them of benefits of cooperation.

He said that relations with the present leadership of the holding are becoming more and more business-like. He said that Naftogaz needs partnership with large international oil and gas companies, as it allows it access to technologies, financial resources and western standards of doing business.

Daele said that Shell was the first large international oil and gas company to enter Ukraine, although the results of hydrocarbon exploration and extraction are less than expected.

He added that the results of Shell's work in the retail business had exceeded its expectations: the company's share of the market is 6%, and the company plans to increase it to 10-15%.

"We continue growing as quickly as the situation on the market allows," he told Interfax-Ukraine. He added that Shell did not change its investment strategy towards Ukraine during the financial crisis.

As reported, Naftogaz Ukrainy and Shell Exploration & Production Services (RF) B.V. signed an agreement on cooperation in December 2005. According to the agreement, Shell is to work on 10 fields with licenses belonging to Naftogaz Ukrainy.

NOTE:  Shell is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C.,