Ukraine’s Fuel and Energy Ministry may work with Japanese and Turkish investors to build a liquefied natural gas (LNG) facility on the Black Sea coast. According to press reports, ministry officials met with representatives of Japan’s Mitsubishi Group and Turkey’s Calik Enerji in Kiev last week to discuss proposals for the construction of an LNG regasification terminal. The facility would be able to regasify enough LNG to cover about 20% of Ukraine’s total gas consumption, or 10 billion cubic metres per year, said Burzu Aliyev, Ukraine’s deputy fuel and energy minister. (This is equivalent to about 6.76 million tonnes of LNG per year.)

Aliyev said that the terminal would handle LNG from Azerbaijan and Central Asia. After regasification, some of the fuel would be distributed within Ukraine, and the rest would be exported to Europe via the Ukrainian pipeline network, he added.

This would help both Ukraine and Europe diversify gas supplies and reduce dependence on Russian imports, Aliyev said. Diversification would be particularly beneficial for Ukraine, as it would bring domestic gas prices down by up to 50%, he claimed. The deputy minister put the cost of constructing the terminal at US$750-800 million. Mitsubishi and Calik Enerji indicated in preliminary discussions that they would be willing to fund most of the project if the Ukrainian government provided guarantees for the investment, he said. He stressed, though, that discussions on the project were still in the early stage. The parties have yet to draw up a business plan, he stated.