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Ukraine is going to build a liquefied natural gas (LNG) plant on the Black Sea coast to diversify its gas supply and strengthen its position as a major transit country, the Ukrainian ambassador to Turkey, Sergiy Korsunsky, announced as he elaborated on Ukraine’s increasing importance in the energy supply route from Asia to Europe and the growing cooperation between Turkey and Ukraine, in advance of a strategic council meeting between the two countries, Todays Zaman reported.

"This LNG plant we are looking to build in Odessa is one of the 10 major national projects of Ukraine," Ambassador Korsunsky said in an interview with Today’s Zaman and noted that a Spanish company, SOCOIN ingeniería y construcción industrial, S.L.U., had won the preliminary feasibility study in a tender conducted in September the results of which are expected to be made public soon. At the beginning of next year Ukraine will hold another tender to select the construction company and hopes to attract major energy investors.

The ambassador explained that the LNG plant would constitute an essential element of a memorandum between Ukraine and Azerbaijan that foresees the delivery of the equivalent of 2 billion cubic meters of natural gas through the projected Odessa plant in 2014, a volume that is expected to increase to 10 billion cubic meters by 2015.

In return, Korsunsky noted, Azerbaijan is also planning to build its own facilities in Georgia, initially for compressed natural gas (CNG), but in a later stage also for LNG, which is cooled natural gas in liquid form that makes energy delivery much easier, and at a lower cost through the use of tankers. Korsunsky stated that the energy delivery of LNG will provide an alternative to Russia as the world’s dominant natural gas supplier and that other countries could eventually benefit from LNG delivery by tanker once it is in operation. Ukraine is expected to receive Azeri gas from the export terminal in Kulevi directly at its own terminal. That same terminal will be used to load the tankers carrying the LNG to Romania, relying on the Azerbaijan-Georgia-Romanian Interconnector, better known by its acronym, AGRI.

Countries that are looking to receive Caspian gas through the LNG terminal also need "regasification" facilities where LNG is moved into cold storage tanks and "regasified" into natural gas before it can be put on the market. "Turkey already has one such facility, while Romania is planning to build one," Korsunsky noted, and added that LNG might just be the next big thing in the transportation of gas, the way of the future for the resource-rich Black Sea littoral. Ukraine is also looking for gas from LNG producers, particularly from Algeria, Qatar, Libya and Egypt, a plan that necessitates a decrease in transportation costs if Ukraine is to opt for a source other than its close neighbor Russia.

The significance of the transportation of natural gas in easily transferrable form lies in its capacity to rival the Russian monopoly over energy supplies, Korsunsky acknowledged and referred to the two natural gas crises between Russia and Ukraine. Failed agreements over gas prices between Ukraine and Russia disrupted gas deliveries to Europe in 2006 and in 2009, and the countries are negotiating over prices again this year. "The transit to Europe is secure," he said, adding: "No war is expected ever again. We just need a fair price."

Ukraine is currently both the largest consumer of Russian gas as well as its main transit route to European countries, with 80 percent of Russian gas to the EU passing through Ukraine, and disputes between the two countries over price reductions affect those countries that receive their supplies from Russia.

"Azeri gas is sure to break that monopoly, or at least provide grounds for negotiation," Korsunsky said, and called on international investors to join in the LNG project that will produce results by 2015. "Turks should be partners, co-investors in the LNG project, it is a national project in the sense that it carries significance for us, but international investment is welcome," he added. Korsunsky also noted that although he can foresee a recession in Europe, long-term projects such as the LNG project might prove beneficial for banks, which will shy away from short-term investment plans.

The only downside of the LNG project might be the increased traffic through the Bosporus Strait, Korsunsky also noted, and the Sea of Marmara is expected to be a popular route for LNG deliveries to Europe via tankers. LNG is a dangerous material to transport, which has led some in Turkey to worry, but the straits are available to Black Sea countries for the free passage of civilian vessels, in line with the Montreux Convention of 1936.