energy market

LNG high on agenda

19.09.2014 | By Ivan Petrov

Recently, prime ministers of Ukraine and Slovakia held an opening ceremony of Vojany Uzhgorod gas pipeline. The new pipe between the gas transport systems of the two countries allowed Naftogaz of Ukraine to start regular reverse gas supplies to the domestic market starting from September. It is planned that gas purchases in Slovakia will amount to 2 bn cu m per year at US $369-370 per 1,000 cu m. The total cost of the contract will be around US $120 mn.

PRIVATE INITIATIVE

This is clearly not enough to cover the internal demand for Ukraine. Neither limited reverse supplies from Poland nor possible gas import from Hungary will help in this. Under condition that the domestic production does not decline, the country needs to find an additional source of supplies for at least another 10 bn cu m for the winter heating season 2014/2015.

Since recently, renewed project of construction of a LNG terminal in Pivdenniy port is believed to be the only realistic option of getting this resource by spring next year.

A year ago, Ukrainian government disgraced itself with this project. Now instead of the government private Odesa companies got involved in the program. In the middle of summer TransInvestService (TIS) announced that it concluded an agreement for lease of a RLNG vessel, which, provided that the contracted volumes are available, will allow the terminal complex to begin gas supply at the level of 5 bn cu m a year.

Ideally, if the investors manage to reserve the GTS capacities by the end of autumn, the supplies could begin in December. Based on pessimistic scenario, they will begin in 14 months. Naftogaz of Ukraine will purchase all the gas from the terminal. As Head of TIS Andriy Stavnytser told the press the approximate price of gas after regasification will be US $290360/1,000 cu m.

For the moment, contracts concluded in 2013 in Tunisia by the Ukrainian company Odesagaz owned by Ihor Uchitel and Serinus Energy Inc. of the Polish oil tycoon Jan Kulczyk are the main resource for the LNG terminal.

HOPING FOR TUNISIA

Earlier his company was known in Ukraine as Kulczyk Oil Ventures Inc. (Canada). It owns KUB Gas, which owns a group of deposits in Luhansk oblast and Prykarpattya. Due to the war in the east of the country, the companys output in the region dropped 35%. At the same time, earlier slow going projects of KUB Gas in Tunisia are now being viewed as promising.

Interestingly, Odesagaz also owns the rights for additional prospecting of the petroleum region Tatuin in Tunisia. According to forecasts Odesagaz and its partners will be able to start producing large resources in Tunisia in several years. Serinus Energy has better prospects in this respect. Unlike Tatuin region, which still requires prospecting, the company acquired four prospected Tunisian deposits in 2013. Supplies from Tunisia to Odesa for local and Polish companies operating in Ukraine could amount up to 11.5 bn cu m starting from 2015. The remaining gas required for filling the capacities of the aforementioned RLNG vessel in Pivdenniy will come from Algeria.

In addition to that, Ukrainian gas traders assure that the required volume of imported gas will be purchased by Ukraine from the companies of Qatar, which have an influence on Turkey. Earlier it was reported that the main reason of inviability of the Ukrainian LNG terminal project was refusal of Turkey to let the tankers through to the Black Sea.

It is quite possible that in several years, if Serinus Energy manages to achieve large volume of production in Tunisia, it will be able to use TransMed pipeline (by which Tunisian gas is supplied to EU) in order to get involved in SWAPcontracts for concession of gas import to Ukraine from the Western direction. This, however, is a faraway prospect. For the time being, the companies interested in expansion of sources of gas supplies to Ukraine can only hope that Kyiv officials will be able to incite interest of Tunisia state companies in the necessity of expansion of cooperation between the two countries.

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