Ukraine can cover more than half of the demand for imported gas through US LNG
Trilateral Memorandum of Cooperation signed between Ukraine, Poland, and the US at the end of August 2019 will give impetus to the diversification of Ukraine's energy market and the rest of Europe. This opinion was expressed by the head of the Senior Program Officer, Europe & Eurasia of CIPE Eric Gontz (USA) in the commentary to Voice of America broadcast.
“Since the signing of the memorandum of cooperation, only one Ukrainian trading company stated that it has signed a purchase contract one LNG batch from the United States. This is the only contract we have so far. One contract will not "pay off" the infrastructure improvements. One needs a long-term contract between creditworthy parties that can be presented to a bank for financing. And that's dozens, or even hundreds, millions of dollars. It will take a year or two to build connectors between Ukraine and Poland, ” said Chow.
According to Senior Fellow at The Jamestown Foundation (USA) Margarita Assenova, the EU is like nobody else interested in the implementation of the diversification project, and, foremost, in the construction of the infrastructure needed for the transportation of regasified natural gas. She added it is not that big money to build the 110km pipeline.
PGNIG said at the signing of the memorandum that it could increase the capacity of the Silesia- Pidkarpatia gas pipeline by 2020 . According to expert estimates, Ukraine can cover 20% of annual gas consumption (which is more than 60% of import demand) by US LNG imports. In particular, Asenova cited the representative of the Polish government on strategic energy infrastructure Peter Naimsky, on the possibility of transmitting up to 6 billion cubic meters a year to Ukraine.
As to the prices for US LNG, according to Assenova, they dropped significantly. For example, at Henry Hub LNG costs less than $ 3 per BTU 1 million. For comparison, this year the EU imported natural gas at just over $ 4 per 1 million BTU. As reported, Energy Resources of Ukraine (ERU) entered into an agreement with Poland's PGNIG to buy US liquefied natural gas after its regasification in Poland.
It is expected that in early November2019, the liquefied natural gas will arrive at the Polish LNG terminal in Swinoujscie, then after regasification it will be pumped into the Polish gas transmission system en- route to Ukraine via the gas-measuring station Germanowice.