Baku, Azerbaijan, Oct. 19 /Trend/
Azer Ahmedbeyli, expert of Trend's analytical center
Deliveries of liquefied natural gas (LNG) in the past were considered economically viable only for remote markets (more than 3,000 kilometers), that is, to those where it was uneconomical to build the pipeline. The pipeline system delivering natural gas today also remains the dominant, covering 93 percent of the world's supply. But gradually the situation began to change. Over the last ten years, the volumes of world LNG trade have doubled.
The supply of Azerbaijani liquefied natural gas to Ukraine will amount to two billion cubic meters 2014, but a year later, these figures will increase to five billion cubic meters, Azerbaijani Ambassador to Ukraine Eynulla Madatli said yesterday in an interview with Ukrainian national news agency.
"In early 2011, in Davos, the two governments signed a memorandum on cooperation in organizing the supply of liquefied natural gas to Ukraine. We are very interested in this, I think Ukraine also. It deals with long-term loading of Ukrainian energy transport systems, transit fuel to other countries. This is a huge, highly profitable project, which has a bright future - for decades ahead," said Madatli.
The project involves the supply of gas, evaluation of infrastructure for delivery of gas from Baku to the Georgian coast, its liquefaction and supplies to Ukraine. A joint venture is planned to be established by the end of the year to finance and conduct a feasibility study for the supply of Azerbaijani liquefied natural gas to Ukraine. In addition, a Spanish company has won the tender to build LNG-terminal on the Ukrainian coast.
Until now, the Black Sea remains a virgin territory for the supply of LNG. None of the Black Sea countries has the infrastructure that would ensure the entire supply chain. It has not been previously demanded as gas transport systems in countries such as Ukraine, Romania, Bulgaria, were and still remain connected with Russian system. Transportation of LNG, for example, from Qatar or Algeria to the Black Sea is unreasonable, primarily because of the congestion of Turkish straits.
The struggle for markets continues. Not only Azerbaijan displays an interest in the Black Sea LNG market. Some time ago, Russian Prime Minister Vladimir Putin instructed to assess the possibility of building LNG-terminal on the Black Sea and calculate the cost of transporting liquefied natural gas to Europe under the South Stream project.
For reference, the financial costs in the global LNG supply chain are as follows - liquefaction 72 percent, marine transportation 15 percent, regasification 13 percent.
By 2015, in the world LNG trade, there will be six export markets and sixteen import markets. The number of LNG tankers in the world over the next three years will increase by 55 units and will reach 400 with a total capacity of 58.4 million cubic meters (after the liquefaction process at a temperature of -160 C, gas occupies a volume of 600 times smaller than its source).
While large national oil companies will continue to dominate in the global LNG industry, private companies will be leaders in the process of re-gasification. In the period from 2010 to 2015, over $140 billion will be invested in the construction of new enterprises to export LNG (data of LNGReports "Global LNG Trends Outlook and Business Prospects", January 2011).