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Ukraine Raised $ 4 Billion to Substitute Gas with Steam and Brown Coal

Naftogaz of Ukraine is getting a loan from the Bank of China for $ 3.656 billion to finance projects for gas replacement with steam and brown coal.
In July, the Ministry of Energy of Ukraine signed a cooperation protocol with the China Development Bank for replacement of natural gas with coal. The program foresees switching thermal power stations from gas to coal, as well as contruction of “plants for gasification of lignite and steam coal” in Lugansk, Donetsk and Odessa regions using Shell technologies. “This technology crushes coal for its further usage at the TTP”, - explains the Director for Business Development in the CIS Countries at the Argus Media. The cost of construction of such enterprises is unknown. But because of the difference in prices for coal and gas, projects may be beneficial, says Mr. Mishchenko. According to his calculations, at current prices, the difference would be about $ 337 per 1,000 cubic meters (given that Ukraine bought gas from Russia in the IV quarter of 2012 at about $ 430 per 1,000 cubic meter). The first project to replace natural gas with coal will enable Ukraine to reduce gas imports by more than 3 billion cubic meters and annually save about $ 1.2 billion.
Because of the high price of Russian gas, Ukraine actually stopped all gas power units a few years ago. About half of the country's electricity production now accounts for nuclear power generation, one third comes from coal and about 20% from hydro energy. Coal accounts for about 40%, HPP for about 10%, and nuclear power plants for 50%.
Use of coal is a right decision. After shale revolution in the U.S., this country began to use more gas, which reduced the world price of coal. The trend will continue. Ukraine has a lot of its own coal (4% of world reserves). But the country produces mainly coking coal, while pulverized burning foresees usage of steam coal, which is imported from Russia. In 2009, Russia supplied Ukraine with 3.4 million tonnes of steam coal, and in 2011 - 5 million tons.