U.S company Xcoal Energy to sell steam coal to fuel-strapped Ukraine

WASHINGTON (Reuters) - A Pennsylvania-based coal company said on Monday it signed its first contract with Ukraine to sell coal that is burned to produce electricity in a deal sped along by the U.S. and Ukrainian governments.

Privately held Xcoal Energy & Resources agreed to supply Centrenergo PJSC, one of the largest power companies in Ukraine, with 700,000 tons of steam coal in coming months.

Ukraine has sought alternative coal suppliers ahead of the upcoming winter as it struggles to get the fuel from pro-Russia separatist-held regions in the east.

The deal came together with the help of the U.S. and Ukraine governments, Xcoal spokesman Ted O’Brien said, adding that the company could have more opportunities to do business with Ukraine in the future.

“We were first contacted by the (U.S.) Department of Commerce regarding a delegation from Ukraine to meet with coal suppliers,” O’Brien said. “It was very much the result of a concerted effort from the governments of both countries.”

Xcoal plans to send the first shipment of 210,000 tons of coal to Ukraine by early September. Terms were not disclosed.

“In recent years, Kiev and much of Eastern Europe have been reliant on and beholden to Russia to keep the heat on,” Energy Secretary Rick Perry said. “That changes now.”

U.S. President Donald Trump has said supplying coal to Ukraine is one of the goals of a plan to make the United States energy “dominant.”

The deal announced on Monday was less than the “millions and millions” of tons of coal that Trump said Ukraine has sought.

The Ukraine steam coal shipments will do little to help the battered U.S. coal industry which has been hit by a glut of competing cheap natural gas. U.S. coal output last year sank to the lowest level since 1978.

U.S. coal exports to the world through May this year rose 60 percent from the same period in 2016 to nearly 37 million tons, a trend the Trump administration was quick to claim was due to its axing of Obama-era environmental regulations.

It was unclear whether the spike would last as the United States faces higher production and shipping costs than other exporters.

Supplying European allies, which have long been dependent on Russia for gas, with U.S. liquefied natural gas (LNG) is also part of Trump’s energy plan. Former President Barack Obama’s administration also pushed to ship LNG to allies.

Editing by Jeffrey Benkoe