16:23 GMT +320 May 2018
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    US Offer of 'Millions of Tons of Coal for Ukraine' Has One Important Catch

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    President Trump has announced that Kiev has requested "millions and millions of metric tons" of coal from the US, and that the US was prepared to sell it. Speaking to Sputnik, energy expert Alexei Belogoryev explained that any US-Ukrainian coal contract would have one very important nuance: the Ukrainian government wouldn't be paying for it.

    In a speech at the Department of Energy in Washington, DC on Thursday, Trump spoke about the prospects for expanding US coal exports. According to the president, the US is ready to sell its coal to Ukraine, and to other countries around the world.

    "Ukraine already tells us they need millions and millions of metric tons [of coal] right now and there are many other places that need it too," Trump said. "And we want to sell it to them and everyone else all over the globe who need it," he added.

    The issue of coal supplies was one of the main topics discussed during Ukrainian President Petro Poroshenko's visit to Washington last week. Following his talks with US officials, the Ukrainian leader said that Kiev was 'excited' about the possible purchase of two million tons of coal from Pennsylvania.

    In this Wednesday, April 27, 2016 photo, a coal ship pulls up to the piers in Newport News, Va.
    © AP Photo / Steve Helber
    In this Wednesday, April 27, 2016 photo, a coal ship pulls up to the piers in Newport News, Va.

    Ukrainian President Petro Poroshenko, left, and US President Donald Trump during their meeting. File photo
    © Photo : President of the Ukraine Press-Service
    Ukraine's supplies of coal started running out in early 2017, when pro-Kiev radicals blocked off supplies from the coal-rich Donbass region, the site of a frozen conflict between Kiev and local pro-independence militia. Kiev introduced emergency energy-saving measures in February, and formally endorsed the blockade in March. Radicals have since threatened to cut off supplies from Russia, too, and Ukrainian officials have announced plans to completely halt the purchase of coal from Russia.

    Speaking to Radio Sputnik, Alexei Belogoryev, the deputy head of the Moscow-based Institute of Energy and Finance, said that if the US does begin delivering coal to Ukraine, the Ukrainian government certainly isn't going to be the one paying for it.

    "The logistics will cost about $300 million dollars a year. And it doesn't matter where the coal comes from – the US, South Africa or Australia," the expert explained. "Of course, coal from the Donbass is closer, and the cost to transport it is much lower. But apparently this is the political price that Kiev is ready to pay. But it will not be the government paying it, but energy companies, and ultimately, consumers," he added.

    Wagons for transporting coal wait to be transferred in Donetsk, eastern Ukraine.
    © AP Photo / Mstyslav Chernov
    Wagons for transporting coal wait to be transferred in Donetsk, eastern Ukraine.

    As far as deliveries from the US were concerned, Belogoryev emphasized that coal sales are something that take place between businesses, and political agreements have nothing to do with them.

    "In the US, the state's share of the energy sector is very small. Basically these are private companies. Therefore, frankly, assurances from the Trump administration do not play any major role, since this is a matter between private companies among themselves," the analyst said. "Moreover, it's no secret that US coal is already being supplied to the Ukrainian market. Therefore, it's not very clear why these political agreements are needed," he added.

    One theory, according to the analyst, was that the US is looking to dump their surplus gas and coal supplies, and Poroshenko's gestures could subsequently be seen as a nod to its partners in Washington.

    Whatever the case may be, Russian Senate Committee on Economic Policy deputy chairman Valery Vasilyev suggested that political announcements aside, Kiev probably won't be able to replace its existing partners anytime soon.

    "No one has canceled the laws of pricing and logistics have yet. Economic laws are such that even if distant supplier countries are interested in the market and ready to engage in dumping, sooner or later they will want to recoup their additional costs," Vasilyev said. Accordingly, the senator noted, Ukrainian consumers will be the ones to pay for Poroshenko's curtsey before Trump.


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