Matiyeshyn on Europe, through a Ukrainian eye

An idea of LNG-terminal construction has been discussed in Ukraine for a long time already. The government and opposition constantly highlight the necessity of reduction of energy dependence upon Russia. Similar statements can be heard more loudly with electoral campaigns coming closer. However, something always got in the way when it came to realization of concrete projects. This year hasn’t become an exception also when the government has brought into focus a question of search of alternatives to Russian gas on the eve of parliamentary elections. Statements of the vice-premier of Ukraine S.Tigipko that Ukraine should support construction of the tanker fleet for liquefied gas transportation look at least very strange. Especially, if we take into consideration a catastrophic condition of the ship-building sphere.

At the end of March Ukraine’s State Agency for Investments presented technical and economic assessment of LNG-terminal construction project at the Black sea coast with 10 billion cubic meters capacity. It is planed to start its construction in July, 2013. According to optimistical forecasts of the Ukrainian officials, the first gas from the LNG-terminal should come to Ukrainian gas-transport system (GTS) in 2016, and in 2018 it will start to work at full capacity. However, there are a lot of reasons which put the realization of this project in doubt.

Firstly, the revision of Ukrainian-Russian gas contracts of 2009 is very unprobable with the current leadership of Ukraine, at least till 2015.

Secondly, the reduction of Russian gas price directly depends on the question of creation of a consortium on management of the gas-transport system of Ukraine with Russia’s participation. The credit line of Russian banks for Ukraine’s payment for that same Russian gas constantly increases. Hence, what part in this possible consortium will belong to Ukraine as a debtor of Russia, is a question which needs no answer.

Thirdly, a considerable external financing is necessary for the realization of the mentioned project. The sum fluctuates within 850 million euros. The government declares that it has contacted companies such as Exxon/Mobil, Chevron and Total with an offer to participate in project financing. However, it’s not known about the consent of any of them to participate in the project till now. Besides, the indicated companies have been admitted to participation in projects on development of considerable deposits of hydrocarbons in Russia. Hence, Russia’s influence on decision-making of these companies concerning participation in the Ukrainian project allows to assert that the situation won’t change.

It looks like the Ukrainian government starts to understand all the hopelessness of LNG-terminal construction. Especially, in case the Ukrainian GTS will belong to Russia. The current inactivity of the Ukrainian authorities only confirms development of such scenario.

Azerbaijan and Turkmenistan were voiced among sources of gas supply for the LNG-terminal, and in the long-term prospect it could be Algeria, Egypt, Nigeria and Qatar as well. However, issues of distribution of energy resources in regions of these countries are directly connected with geopolitics. Ukraine again and obviously loses to Russia in this sphere. Hence, there is no need to expect the observance of schedules voiced by the government concerning the construction. And there is no point in doubting the fact that Kremlin which is interested in impracticability of this project will take a rigid international position.


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