Ukraine's Plans for LNG Face Turkish Resistance

February 7, 2013

Reuters reports that Ukraine's plans to replace imports of natural gas from Russia with cheaper liquefied natural gas (LNG) supplies via the Black Sea face resistance from Turkey, which wants to become a regional LNG hub itself. "We understand the Turkish side's concerns ... (Increased) traffic through the Bosphorus has both pros and cons," Vladislav Kaskiv, the head of Ukraine's state investment agency, said in an interview.

"On the one hand this means increased economic activity; on the other hand there are environmental problems."

Turkey controls the Bosphorus and Dardanelles straits, which connect the Black and the Mediterranean seas, and has warned Kiev it may deny right of passage to LNG tankers bound for Ukraine due to congestion.

Turkey's energy minister, Taner Yildiz, said last May that Turkey was against Ukraine's proposed construction of an LNG terminal on the Black Sea coast. He cited increased tanker traffic through the Bosphorus as well as heightened environmental and safety risks, according to Reuters.

Kaskiv said Kiev was determined to press ahead with its project to build an LNG terminal and had received a legal opinion from U.S. law firm Baker Botts that LNG tankers must be granted free right of passage in the Turkish straits.

"We must protect our national interests," he said. "The bottom line is: there are no legal issues, and the situation needs to be resolved politically on the bilateral level."

Ankara has suggested that the former Soviet republic buy LNG from one of Turkey's existing or planned terminals, shipping it via a route that bypasses the Bosphorus and Dardanelles.

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