UPDATE 2-Gas Natural denies Ukraine gas plant claim

Mon Nov 26, 2012 12:18pm EST

* Ukraine says LNG plant to be built with Gas Natural

* Spanish firm denies signing contract (Writes through with Gas Natural denial)

KIEV/MADRID Nov 26 (Reuters) - Ukraine, keen to show it is weaning itself off Russian gas, announced on Monday it had created a consortium to build a $1.1 billion liquefied natural gas plant, but its reported partner, Gas Natural of Spain, swiftly denied any involvement.

Ukraine said it would build the first LNG regasification terminal within its borders, in partnership with Gas Natural, which would allow it to import gas from all over the world, breaking its dependence on Russia.

But Gas Natural flatly denied signing any deal with Ukraine.

"Gas Natural has not signed any contract to invest in an LNG plant in the Ukraine, nor are we leading any consortium to develop such a terminal... nor are we studying anything along these lines," the company said in a statement.

Ukraine is due to import 27 billion cubic metres of natural gas from Russia this year but wants to reduce it to 18-20 bcm next year, a difficult task with little domestic output and a legacy of Soviet infrastructure which binds it to Siberia's gas fields.

Among governments on the European continent, it is one of the biggest shale gas enthusiasts and has issued exploration licences to try to kick off a development programme.

Its budget also receives about $2.5 billion a year in transit fees for the gas that crosses Ukraine to customers in Europe.

Russia, for which Ukraine is as large a consumer as Germany, is, however, rerouting its Europe-bound shipments to pipelines bypassing Ukraine. Shipments via Ukraine fell 20 percent year-on-year to 63 bcm in January-September.

In comments denied by the Spanish firm, Vladislav Kaskiv, the head of Ukraine's state investment agency, said Gas Natural would have a 75 percent stake in the consortium and the former Soviet republic will own the remaining 25 percent.

Even after the official denial by Gas Natural, Ukraine's state investment agency insisted the deal had been signed and said it was looking into the report stating otherwise.

"There must have been some miscommunication," a spokeswoman for the agency said.

The Black Sea LNG terminal project is important for Ukraine's efforts aimed at diversifying natural gas supplies as its existing pipeline network only facilitates imports from Russia.

"According to our estimates, the price of gas (imported through the LNG terminal) will be at least 20 percent lower than that of Russian gas," Kaskiv told reporters.

Ukraine plans to launch the LNG terminal in 2015 using a floating offshore regasification facility and complete the construction of an onshore facility by 2018, allowing it to import about 10 billion cubic metres of gas a year. ($1=0.7717 euros) (Reporting by Natalia Zinets in Kiev and Tracy Rucinski in Madrid; Writing by Olzhas Auyezov, editing by William Hardy)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.