Ukraine To Boost Gas Output By 50% To Cut Dependency

KIEV, Ukraine -- Ukraine, facing price increases from natural gas suppliers Russia and Turkmenistan, will seek to raise its extraction of the fuel 50 percent this year to reduce its dependence on Russia, PM Yuriy Yekhanurov said.


"We can extract at least 30 billion cubic meters of gas per year,'' Yekhanurov said Saturday in the central city of Poltava in remarks broadcast by Ukraine's Channel 5 television.

Ukraine depends on fuel imports, mostly from Russia, for about 80 percent of its energy needs.

President Viktor Yushchenko, whose election in 2004 soured Ukraine's relations with Russia, is eager to reduce his country's reliance on companies such as Gazprom and Transneft by attracting foreign investment to develop local fields and spending government money on foreign energy projects.

Ukraine wants to invest in gas and oil extraction in Libya, Egypt and the Black Sea together with international oil companies.

Ukraine will spend $100 million exploring for gas and oil this year, according to the government's budget.

Gazprom cut natural gas supplies to Ukraine on Jan. 1-3, forcing Yekhanurov's government to agree to pay almost twice as much for gas as in 2005. Ukraine's parliament last month voted to oust Yekhanurov's government because of the gas-price agreement. Yushchenko has asked Ukraine's Supreme Court to annul the vote and ministers have remained in their posts.

"Ukraine has at least 500 gas wells, but only 50 wells are in use," Yekhanurov said.

The government will auction licenses to extract oil and natural gas in the Black Sea on March 24, seeking $2 billion in investments, Yekhanurov said Feb. 10. Twelve companies, including Royal Dutch Shell and some Turkish companies, have already expressed interest in extracting gas and oil on Ukrainian territory, Yekhanurov said Feb. 10.

Ukraine, with 47 million people, consumes 76 bcm of gas annually. Half of that is imported from Turkmenistan through Russia, 20 bcm is extracted in Ukraine and another 16 bcm comes from Russian producers.

Source: Bloomberg

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