Ukraine-China Gas Projects Unprofitable, Offer no Political Benefit to Kiev

MOSCOW, January 29 (Sputnik) — Planned joint gas projects between Ukraine and China are politically advantageous for Kiev, but not economically profitable, a member of Russia's Chamber of Commerce and Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security, Rustam Tankaev told Sputnik Thursday.

"This is not about saving money, it is about energy independence. From an economic point of view it is not profitable. From Ukraine's national security perspective, this is a good decision," Tankaev said.

Ukraine wants to activate its partnership with China concerning the implementation of a program for the substitution of natural gas with synthetic natural gas produced from fossil fuels within the framework of a credit agreement with Beijing, the Ukrainian Energy Ministry said Wednesday.

In 2012, the Ukrainian energy company Naftogaz and the Chinese National Bank signed a credit agreement, stipulating that China would provide the company with $3.7 billion to implement its program of natural gas substitution with synthetic natural gas produced from coal. Kiev hopes China will help Ukraine to modernize its thermal power stations, which will allow the country to reduce its gas purchases from Russia by 4 billion cubic meters per year.

Tankaev, however, said that the process for developing synthetic natural gas has two negative features, including its high price and poor controllability.

"Normal gas is several times cheaper than any synthetic gas. Apart from that, building and operating a synthetic gas factory is more expensive than a simple thermal power station," Tankaev explained.

Tankaev concluded by saying that due to the problems in Ukraine's economy, it is trying to use every available option, even though China itself does not use its own technology to create synthetic gas from coal. The expert also added that Ukraine might lack coal for such processes.