Ukrnafta to produce gas at Olesska field in western Ukraine

KYIV, April 8 (Reuters) - Ukrainian oil company Ukrnafta will produce gas at the Olesska field in the west of the country, the government said on Tuesday of a site that previously drew interest from U.S. oil major Chevron CVX.N.

State-run Naftogaz owns 50% plus one share in Ukrnafta, which holds 86 production licences and three for geological exploration in eight Ukrainian regions.

Ukraine and Chevron signed a $10 billion shale gas production-sharing agreement in 2013 and it was expected that the 5,260 square km (2,000 square miles) Olesska field would produce 5 billion cubic metres (bcm) of gas per year and possibly as much as 8-10 bcm.

In 2014 the American oil giant decided to quit the deal and in 2015 it terminated its business in Ukraine.

Ukraine, previously heavily reliant on gas imports, has sought to meet its needs in recent years with gas produced domestically.

However, the country has been forced to import substantial volumes of gas this winter and spring after Russian missile attacks damaged production facilities in the east of the country.