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Qatar might supply liquefied natural gas to Ukraine: How real does it seem?

Author : Leonid Unihovsky

11:30, 22 March 2018

Qatar might supply liquefied natural gas to Ukraine: How real does it seem?

Author : Leonid Unihovsky

Following the visit to Qatar, Ukraine’s President Petro Poroshenko has stated that this Middle Eastern country is ready to provide Ukraine with the liquefied gas

11:30, 22 March 2018

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Following the visit to Qatar, Ukraine’s President Petro Poroshenko has stated that this Middle Eastern country is ready to provide Ukraine with the liquefied gas. At the same time, neither the terms of supply nor its possible price is disclosed. However, this information could provide the answers to the main questions of the ongoing discussions: why Ukraine needs it and how profitable it is.

Related: Britain seeks to replace Russian gas, - May

If you go back to the history, the issue of supplying liquefied gas to Ukraine is not original. Since the 2000s, the experts have been elaborating the ways of resolving this issue. Then, on behalf of the government, we (Naftogazbudinformatyka LLC) took up this project. They have prepared several preliminary feasibility studies. They have chosen the ports, where the terminal could be located, - Ochakiv, Feodosia (the territory of Crimea occupied by Russia) and the "Southern" port near Odesa. Then the project was taken away by the Vladyslav Kaskiv’s agency for investment and management of national projects. A feasibility study for the construction of an LNG terminal in the Pivdenny port (Ukrtransnafta’s site) was developed.

Related: Ukraine could become gas hub, but turning into black hole

The main reason why the project was not implemented was the issue of the liquefied gas delivery, which cannot be solved taking into account the policy of the Turkish authorities regarding the passage of goods across the Bosporus. Tankers with oil could pass, while methane trains cannot. Despite repeated efforts of Ukraine (the government delegations traveled tried to influence, there were several meetings of the Ukrainian-Turkish group on this issue), the Turkish authorities did not give permission for transporting methane through the Bosporus. As far as I know, the question has not been resolved yet. Does this mean that it is impossible to solve it? I suppose, no. At the time when our company was engaged in the project of the LNG terminal, we were approached by a US law firm that offered its services to lobby the issue before the Turkish government. Then the question has died down.

In my opinion, the question of the Bosporus and the Ukrainian LNG terminal is not so significant, if the project of building an interconnector with Poland was implemented, which assumes an increase in the capacity for gas imports to Ukraine to 8 billion cubic meters per year. In this case, we could receive Qatar gas from the Polish terminal in Swinoujscie.

Related: Ukraine can reduce gas consumption by 5 billion cubic meters, - PM

But, of course, the price is the key issue here. According to the current agreement, which is concluded between Qatar and Poland, as far as I know, gas could be supplied to the Polish gas market at a price of about $ 370 per 1,000 cubic meters. Given that the market price of gas in Ukraine is 220-230 dollars per 1 thousand cubic meters, it looks very expensive. At the same time, I do not know what price president Poroshenko has agreed on.

Could Qatar offer Ukraine a preferential price? Sure. It is possible that the parties have agreed on the barter – the supply of the liquefied gas in exchange for food or some goods (for many years, Ukraine has been exporting grain, flour, and meat to Qatar). In addition, Qatar companies are interested in the possibilities of obtaining Ukrainian agricultural lands in their ownership. If they have really negotiated on a barter, the price of gas could be random, and it would definitely be less than $ 370 per 1,000 cubic meters.

Related: Ukraine-Russia gas conflict not to impede Nord Stream II implementation, - official

Of course, gas from Qatar is more expensive than if it were possible to buy it from Gazprom. But it can serve as a good insurance in case of a sharp cold snap or lack of additional gas from Europe. We have already faced a similar situation in early March. Because of Gazprom's refusal to supply gas to Ukraine in volumes stipulated by the decision of Stockholm Arbitration, Naftogaz was forced to urgently purchase gas from Poland. The company admitted that it bought it at the 34% higher price than planned to buy from Gazprom.

 

Related: Gas conflict with Gazprom: Naftogaz increases security of gas-transport system

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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