Ukraine Willing to Invest $1 Billion in Trans-Caspian Gas Pipeline if LNG Terminal Branch Included

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Ukrainian government is willing to invest more than $1 billion in the Trans-Caspian pipeline project if the project includes the construction of a branch to the LNG terminal in the Georgian port of Kulevi. This would enable gas to be transported by sea to Ukraine and be received at a special terminal to be constructed at the Yuzhny commercial seaport.

Construction of a branch from the main pipeline could boost the terminal's transshipments to 20 billion cubic meters from the current 10 billion.

Both the Ukrainian energy ministry and Russia's Gazprom (PINK:OGZPY) (Moscow) have declined to comment on the government's position, but sources say that the government has already sent an official application to Turkmenistan and Azerbaijan to join the project. The pipeline is designed to pump gas from the Caspian regions to the EU, bypassing Russia. Moscow is criticizing the project on the grounds that the Caspian Sea status has not been defined and regulated to date.

Ukraine wants to diversify sources of its gas imports and is seeking to revise a gas contract signed with Russia in 2009. Currently, the country purchases only Russian gas and claims that the price is excessive. The country has no gas terminals at ports and has completed a feasibility study on the construction of a $1.1 billion LNG terminal on its Black Sea coast. The 10 billion-cubic-meter terminal would be financed by a consortium of investors.

Azerbaijan considers the project to be a Turkmenistan and E.U project and has cast itself as an observer, saying that after the two parties agree Azerbaijan will look at the opportunities and conditions on which they might offer territory for the transit of gas through the pipeline.

The pipeline would run along the Caspian Sea floor and could be integrated with the Nabucco pipe system, which is designed to move gas from the Caspian region to Europe through Azerbaijan, Georgia and Turkey. This has sparked opposition from Russia and Iran, which argue that the Caspian Sea's legal status has not yet been decided and that there is also a great risk to the environment.

For related information see March 23, 2012, article - Nabucco Pipeline Consortium Considers Merging with Competing Trans-Anatolia Pipeline.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.