Naftogaz: American Frontera Resources Corporation to supply gas to Ukrainian market in 2-3 years

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Kyiv, July 20, 2015. American company Frontera Resources Corporation, which signed the Memorandum of Understanding with Ukraine’s state-owned energy company Naftogaz, is expected to start supplying gas to Ukraine in two to three years’ time, said Yuriy Vitrenko, Director for Business Development at Naftogaz, during a press briefing at Ukraine Crisis Media Center.

According to Vitrenko, a research for gas extraction and export opportunities will be conducted at the first place; then exploratory drilling will be carried out to eliminate related commercial risks. Only when these two preconditions are met, can the gas be supplied to the Ukrainian market. “We stand at the beginning of a very important, but extremely complicated and long pathway.  It will take at least two to three years before we can speak of any specific supply of gas to Ukraine in more detail, namely it will be 2017, as discussed with Frontera Resources,” explained Yuriy Vitrenko.

The new source for Ukraine’s gas imports is a liquefied natural gas from the company’s facilities in Georgia, thus the Ukrainian market promises new commercial opportinities for the company. According to Vitrenko, the Georgian market is unable to consume the available volumes; therefore, it has to be exported. “Ukrainian market is very promising for Frontera Resources Corporation both from the point of view of gas consumption on domestic market, and gas transportation to Europe via Ukraine is one of the few possible options left,” emphasized Vitrenko.

Vitrenko expressed his belief that leasing a terminal, and not building it from scratch, would be the most likely scenario. “The Memo envisages that we are going to work out various economic options to find out most viable one. One of the options discussed was a so-called CNG-terminal. Based on the modern technology, it allows long-distance transportation of gas, up to two thousand kilometers,” said Vitrenko.

He also emphasized that development of efficient gas market in Ukraine is one of the Naftogas’ priorities. Instead of turning Naftogaz into the largest monopolies on the market, an open and competitive market shall be reinforced. “After these transformations it is quite likely there will be no place for Naftogaz on such a market, so it may be liquidated as a singular company,” said Vitrenko.