Ukraine Supports Trans-Caspian Gas Pipeline Project

KYIV, April 6, 2012 /PRNewswire/ --

Ukraine is ready to invest up to EUR 790 million into the trans-Caspian gas pipeline project. The investment will be madeunder the condition thatan offshoot to the Georgian oil port of Kulevi in the eastern coast of the Black Sea is built.  Kyiv plans to transport liquefied natural gas from Kulevi by tankers to south Ukrainian LNG Terminal Yuzhny, reported press office of the Prime Minister of Ukraine MykolaAzarov.The new gas pipeline is supposed to go through the territory of Azerbaijan and Georgia, bypassing Russia.

During the meeting with the President of Azerbaijan IlhamAliyevthe Prime Minister of Ukraine MykolaAzarov expressed Kyiv's intention to participate in construction of the trans-Caspian gas pipeline, provided all the parties involved reach an agreement, reported press office of the Ukrainian prime minister.

The projectedtransportingcapacityofthe trans-Caspiangaspipelineis30 billioncubicmeters per annum. ItwillallowtransferringgasfromTurkmenistantoNabucco - thealternativepipeline totheRussianSouthStream. The latter is known to be lobbied by Gazprom. The overall cost of the trans-Caspian gas pipeline project is estimated at EUR 7.9 billion.

Russia was reported to be reluctant to the trans-Caspian gaspipelineproject. Russia's foreign ministryargued that BakuandAshgabathad no right to build a pipeline without consent of all Caspian littoral statesdue to the undecided legal status of the Caspian Seaseabed. Azerbaijan insists that it can solve this problem by making a bilateral agreement with Turkmenistan.

Conveniently, Ukraine completed the feasibility study of the LNG terminal Yuzhnylast week. As a result, the project worthEUR 846 millionhas beenoffered to foreign investors. The expected gas transfer capacity of the terminalis 10billion cubic meters per yearwith the prospect of doubling its capacity later on. The design and construction phase of the project is estimated at 49months.

Notably, in September 2011 the President of Ukraine Viktor Yanukovych offered Russia to run the South Stream gas pipeline through southern Ukraine. This could decreaseits construction cost five times - from EUR 25 billion to EUR 5 billion. Currently, the pipeline is designed to go through the Turkey's waters of the Black Sea.