Ukraine Advances in LNG Terminal Development

Kyiv, August 8, 2012. Today the Ukrainian government approved the feasibility study of the construction of the LNG terminal, informed Ukrainian Energy and Coal Industry Minister Yuriy Boyko. Technical development of the station will be finalized by December 2012, according to the National Project LNG Terminal. The construction of the first line of the terminal will begin in 2013. By 2015 the terminal will be able to process 5 billion cubic meters of gas per year.

The LNG terminal will be built at the shore of the Black Sea in Odesa oblast, southern Ukraine. The final capacity of the terminal is projected to reach 10 billion cubic meters of liquefied gas per year. Comparably, the volume of gas Ukraine imported in January – July 2012 amounted to 19 billion cubic meters. The output capacity of Ukrainian existing gas transporting system, currently responsible for the transportation of 70 percent of Russian gas to Europe, is 178.5 billion cubic meters per year, informs Naftogaz of Ukraine.

The use of new LNG terminal will decrease the price of imported price by 15-20 percent, estimates the State Agency for Investment and National Projects of Ukraine. Currently, Ukraine pays USD 426 per thousand cubic meters of Russian gas. The billion-dollar worth project will pay off in 5 to 7 years. Both the state and private sector will have shares in the business.

In May 2012, Ukrainian government was reported to negotiate an agreement with Azerbaijan regarding the supply of 10 to 15 billion cubic meters of Azeri gas per year through the LNG terminal. Moreover, the construction of the trans-Caspian pipeline – a project Ukraine was ready to invest up to EUR 790 million into – is set to allow Ukraine to transport tankers with liquefied natural gas from the Georgian Black Sea port Kulevi to the Ukrainian LNG terminal.

In 2011, SOCOIN Ingeniería y Construcción Industrial, Spain, won the right to produce the feasibility study of the LNG Terminal National Project. The construction of the terminal will allow Ukraine to import gas from the countries of North Africa and the Middle East, states  Naftogaz of Ukraine. Ukrainian officials are also negotiating with Algerian, American, and Qatari companies in order to obtain preliminary agreements on possible gas supply once the LNG terminal in Ukraine becomes functional.