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Ukraine’s plan to import African LNG too costly, says Russian expert

September 16, 2014, 21:26 UTC+3 KIEV
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KIEV, September 16. /ITAR-TASS/. Fuel-hungry Ukraine is looking to Algeria, Nigeria and Qatar for liquefied natural gas (LNG) to replace Russian gas, but this is way above the budget of the Ukrainian energy sector, the director general of the Russian National Energy Institute told ITAR-TASS on Tuesday.

Ukraine plans to import five billion cubic meters of gas a year from these countries, which is 17% of the country’s gas needs, Sergei Pravosudov said.

Even if the Ukrainian authorities find the necessary $60-70 million to lease a tank ship to transport LNG and build necessary infrastructure, the cost of imported gas will be excessively high for Ukraine, the specialist said.

“It is not likely that African exporters will give up a lucrative buildup of LNG exports to the Asia-Pacific region, where it is sold at no lower than $600 per 1,000 cubic meters, for the sake of presently unprofitable supplies to Ukraine at $330-360 per 1,000 cubic meters,” the analyst added.

“Present statements of Ukrainian entrepreneurs about readiness to begin replacing Russian pipeline gas with African LNG are populist against the background of differences with [Russian gas giant] Gazprom,” he said.

Ukraine’s Naftogaz keeps insisting that the price of $385 per 1,000 cubic meters offered by Gazprom is unacceptable and insists that it be revised to a minimum level.

Russia’s Gazprom gas giant halted gas supplies to Ukraine on June 16 over its unpaid debt and filed a $4.5 billion suit to the Stockholm arbitration court. Later, Kiev reciprocated by sending a suit to the court against Gazprom for making Ukraine overpay $6 billion for gas since 2010, setting too high prices in its contract.

“The Ukrainian energy sector together its Western partners have felt free for many years to make such loud statements. As a result, none of the declared joint LNG projects with western companies has been translated into practice,” Pravosudov said.

However, on Tuesday representatives of private Ukrainian companies announced they were going into talks with leading western players on terms of leasing an LNG ship. It was said, in particular, that a memorandum on cooperation had been signed with Norwegian BW.

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