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    Political Action? Why US Coal Shipments to Ukraine 'Make Absolutely No Sense'

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    Commenting on Kiev's agreement with Washington on US coal shipments to Ukraine, independent energy asset manager Eric Kraus told Sputnik that the document is all about politics rather than economics.

    The Ukrainian Embassy in Washington confirmed on Monday that the US energy company XCoal Energy & Resources had prepared its first shipment of coal to Ukraine as part of a deal with Ukrainian state electricity generation company Centrenergo PJSC.

    The agreement was reportedly reached during Ukrainian President Petro Poroshenko's visit to the United States in June.

    "Obviously, this is a political action", Kraus pointed out referring to the deal which he said "makes absolutely no sense" given US coal's expensive price tag.

    He explained that "the entire energy and especially metal industry of Ukraine was based on availability of cheap coal delivered from the country's Donetsk and Lugansk regions.

    According to him, with the "high" price for the first shipment of US coal to Ukraine, "nobody knows what the rest is going to cost", something that he said may "kill Ukraine's metal industry."

    Referring to the agreement on US coal supplies to Ukraine, Kraus said that "this is a politically driven deal which was not based on any economic rationality."

    Also, there is a big question mark over who is going to pay for the deal, according to Kraus.

    On July 31, Ukraine's state-owned power generation company Centrenergo PJSC announced that it would purchase American thermal coal from Xcoal in the US state of Pennsylvania.

    The White House said that the partnership will provide Ukraine with a secure, reliable alternative energy source ahead of the winter months.

    Ukraine has been experiencing a severe deficit in anthracite, the most in-demand and high-quality type of coal in the country. this shortfall within Ukraine's power plants is having a bad knock on effect on the country’s households. 

    The crisis occurred when the government prohibited trade with the self-proclaimed Donetsk People's Republic (DPR) and Lugansk People's Republic (LPR) in eastern Ukraine, where most of the country's coal mines are located.

    The incident is rooted in the conflict-fraught relationship between Kiev and the self-proclaimed republics that rejected the new government that came to power as the result of the Euromaidan protests, instead seeing it as a coup d'état.

    Since then Ukraine has been replacing anthracite with a cheaper type of coal, simultaneously increasing the import of both coal and natural gas.

    Related:

    Russia Still Plans Annual Coal Supplies to Ukraine Despite 1st US Shipment
    US Officials, Miner Celebrate 1st Shipment of Domestic Coal to Ukraine
    Ukraine's Move to American Thermal Coal to Boost US Economy - White House
    'Show of Loyalty' Amid Economic Turmoil: US Triples Coal Price for Ukraine
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    action, price, supplies, coal, shipment, industry, United States, Ukraine
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