The deal was signed by Ukrgazdobycha Director General Ilya Rybchich and Rien Herber, the exploration director of Shell Exploration & Production in Europe, at a meeting in The Hague attended by Ukrainian President Viktor Yushchenko.
"We are interested in Shell beginning serious work in Ukraine," Yushchenko said.
Under the agreement, Shell's will invest at least $100 million initially on prospecting oil and gas deposits in the country. Shell is prospecting for potential deposits at eight sites it currently leases from Naftogaz, Ukraine's national oil and gas company, which holds the licenses, Yushchenko's press service said.
Shell Exploration and Production, which runs Shell's upstream activities, will work under the agreement at eight sites in Ukraine's Dnepr-Donets Basin, to which Ukrgazdobycha holds licenses. Shell will receive 50% of revenue through the agreement, with work scheduled to begin before the end of June.