LONDON, Jan. 7 (UPI) -- The economic climate in Ukraine is no longer conducive to continue investing in shale natural gas opportunities, producer JKX Oil & Gas said Wednesday.

"The board of JKX has decided that the combination of Ukrainian Government-imposed restrictions on selling its gas to industrial clients and the punitive rate of gas production tax requires the company to suspend its planned 2015 capital investment program in Ukraine until the economic parameters for investment improve," it said in a statement.


The company in August said new budget measures passed by the Ukrainian government means higher taxes for the oil and gas industry in the country. The most significant, it said, was a move to nearly double the tax on gas production to close to 55 percent.

In its latest statement, the JKX, which has headquarters in London, said the market available to private gas producers in Ukraine was contracting, noting the competition for industrial customers was becoming "intense."

Ukraine is one of the Eastern European countries rich in shale natural gas. JKX said its production in Ukraine for 2013 averaged 9,731 barrels of oil equivalent per day, an 18 percent increase from the previous year.

The company started a multistage hydraulic fracturing operation in Ukraine in 2013, describing it as likely the largest operation of its kind in Europe to date.

Last month, U.S. energy company Chevron said it terminated a production agreement because of legislative hurdles in Ukraine.