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Ukraine - new route for Azerbaijani gas

Commentary Materials 2 May 2011 12:46
The annual increase in gas production, discovery of new fields, availability of a large number of promising gas structures, and most importantly, proven gas reserves, amount to 2 trillion cubic meters open to Azerbaijan's new promising markets eager for this fuel. The presidents of Azerbaijan and Ukraine recently held talks in Baku regarding the possibilities of the Azerbaijani LNG supplies to this country.
Ukraine - new route for Azerbaijani gas

Azerbaijan, Baku, May 2 / Trend /

Seymur Aliyev, Deputy Director of Trend Agency

The annual increase in gas production, discovery of new fields, availability of a large number of promising gas structures, and most importantly, proven gas reserves, amount to 2 trillion cubic meters open to Azerbaijan's new promising markets eager for this fuel.
The presidents of Azerbaijan and Ukraine recently held talks in Baku regarding the possibilities of the Azerbaijani LNG supplies to this country.

Ukrainian Fuel and Energy Minister Yuri Boyko said Ukraine will be able to receive LNG from Azerbaijan in three years. He said this was agreed last week during Ukrainian President Viktor Yanukovich's visit to Baku.

Today, Azerbaijan is considering various options for its gas exports. The country mainly focuses on supply routes such as the Southern Energy Corridor supported by the European Union and gas supply routes to the Middle East, Iran and other areas. The Southern Energy Corridor includes Nabucco, ITGI and the Trans-Adriatic Pipeline (TAP).

Projects related to the LNG supply to the Black Sea basin have recently become much more active. One of the promising projects along the Azerbaijani gas supply chain is the Azerbaijan-Georgia-Romania Interconnector (AGRI), which Hungary has already entered. The project involves the LNG supply to Europe via the Black Sea.

Construction of the LNG infrastructure in the Kulevi oil terminal (Georgia) of the State Oil Company of the Azerbaijan Republic (SOCAR) is one of the most important components of the AGRI project.

The presence of this infrastructure facility will allow transfer from Azerbaijani LNG supplies to any Black Sea country with a receiving terminal.

Ukraine defined the project to construct an LNG terminal as one of its national projects.
Kiev sees Azerbaijan as one of the coveted and priority suppliers of LNG, for several reasons.

Ukraine has already established a state-owned enterprise for the construction of the terminal. Its task involves preparing a feasibility study and searching for investors for the project.

Kiev believes that the main advantage of Azerbaijan as a supplier is a short delivery path, which will rely on mutually beneficial cooperation terms.

The preparation of a feasibility study to construct an LNG receiving terminal in Ukraine will be completed in the third quarter of next year, according to a report on the presentation of the terminal, posted on the official website of the State Agency of Ukraine for National Projects.

Plans to establish an international consortium in the third or fourth quarter of 2011 for the project are on the table, according to information in its presentation. The design for the terminal's construction will take place in 2012. Available information indicates that the signing of contracts for the LNG supply is scheduled for the last three quarters of 2012 and the first quarter of 2013. The plan is to begin the first phase of construction of the terminal from the second quarter of 2013, with completion by late 2015.

Azerbaijan, Egypt, Libya, Algeria and Qatar are considered as part of the LNG supply routes to the terminal. In terms of distance, the option of Azerbaijan as a supply route is the shortest (2,300 km).

The Azerbaijani gas supplies to Ukraine will open to Azerbaijan new markets of energy carriers. Today the republic is interested in increasing the number of its energy supply routes that would not only provide diversification and security of supply, but also maximize profits arising from the implementation of these operations.

In the future, the supply by different routes starting in Azerbaijan could be considerably increased at the expense of transporting gas by Central Asian producers and, in particular, Turkmenistan.

However, it is worth noting that the availability of a ready, safe and efficient infrastructure and competitive transportation conditions are among the basic conditions for supplying gas from the Caspian region via various routes. Today, Azerbaijan fully secures its energy security and delivers its gas to a given region. To transport gas on any special route, potential consumers must create the necessary conditions and infrastructure to receive Caspian energy.

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