Ukraine eyes Chinese coal gasification technology

KIEV -- Ukraine is interested in Chinese technology that can generate power via coal gasification, Prime Minister Mykola Azarov said Tuesday.

"The substitution of expensive imported gas with coal is a strategic issue for us. We are interested in the Chinese technology of coal gasification and coal-water fuel production," Azarov said during a meeting with Li Jiping, vice-president of the China Development Bank.

Successful implementation of projects involving coal gasification will allow the two countries to discuss new large-scale projects during President Viktor Yanukovych's state visit to China scheduled for November, he said.

For his part, Li said the China Development Bank is ready to set up a $3.656 billion credit line to help Ukraine switch its power plants from gas to coal.

Li praised the political and economic stability that has been established in Ukraine, saying it will contribute to further cooperation between Beijing and Kiev.

Ukraine and China on July 16 signed a protocol on cooperation, which envisages the possibility of opening a special credit line in the China Development Bank for Ukraine's coal industry.

The deal includes building three coal gasification plants in Ukraine and switching utilities from gas to coal slurry and a coal-water mix.

According to the document, China is also expected to provide technological expertise for the conversion of Ukrainian plants from gas to coal.

The deal followed a series of agreements reached over the past two years. In September 2010, during Yanukovych's visit to China, the two countries signed a framework agreement on financial cooperation on seven investment projects.

In June 2011, China's Development Bank allocated $85 million to modernize Ukraine's state-owned mine in the eastern region of Lugansk.

The Ukrainian government is seeking to reduce dependence on Russian gas, which cost $425 per 1,000 cubic meters in the second quarter of 2012, by increasing the use of coal in the county's energy mix.

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