Azernews.Az

Azerbaijan and Ukraine will establish a joint venture to explore the project on supplying Azerbaijani liquefied natural gas to Ukraine, Energy Minister Natig Aliyev said Monday after reaching agreement with his Ukrainian counterpart Yury Boyko in Baku.

Ukraine offers Azerbaijan to consider supplying 2-5 billion cubic meters of gas per year, and these volumes "will be taken as a basis" while preparing a feasibility study, Aliyev told the press.

The Azerbaijani and Ukrainian energy ministers signed a memorandum on energy cooperation this January on the sidelines of the World Economic Forum in Davos, in accordance with an agreement reached by Presidents Ilham Aliyev and Viktor Yanukovich. Under the memorandum, the two countries set up a working group to oversee this cooperation.

According to Minister Aliyev, the Ukrainian side said after the taskforce wrapped up its meeting in the Azerbaijani capital on Monday that it plans to start building a gas decompression terminal early next year. It will initially liquefy gas supplied from Qatar through the Bosporus.

"Nevertheless, Ukraine is quite seriously considering Azerbaijani liquefied gas supplies from the Georgian coast," Aliyev said.

Azerbaijani liquefied gas could be supplied to Ukraine under the Azerbaijan-Georgia-Romania Interconnector (AGRI) project, which envisions transporting liquefied gas through Georgia and the Black Sea to Romania.

"Ukraine may become another potential consumer which could increase the effectiveness of the project," Aliyev said.

The AGRI project envisages transporting Azerbaijani gas by a pipeline to the Black Sea coast of Georgia where it will be liquefied at an LNG terminal. Further, the LNG will be transported by tankers to the Romanian port of Constanta and then, in the form of natural gas, will be supplied to customers in Romania and other European countries.

Three capacity options of the AGRI project are being considered - 2 billion cubic meters of gas per year, 5 billion cubic meters and 8 billion cubic meters. The AGRI project cost may vary from 1.2 billion to 4.5 billion euros.

Azerbaijan, Georgia, Romania and Hungary signed an agreement on the AGRI project in Baku last September.

The taskforce meeting in Baku also discussed Ukraine’s over $5 billion debt to Azerbaijan for the imported oil and oil products, and further Azerbaijani oil exports to the country.

Kyiv pledged that the outstanding debt would be repaid in the near future, the Azerbaijani energy minister said.

According to Aliyev, the South Caucasus republic is expected to supply 2 million tons of oil to Ukraine in 2011, the same volume it supplied in 2010. He did not specify the volume of deliveries for 2012.