Ukraine eyes coal after Russian gas price hike

Ukraine's Western-backed leaders scrambled today to find new sources of energy after Russia hiked its gas price by 80 per cent in response to the overthrow of Kiev's pro-Kremlin regime.
The crisis-hit nation saw the amount it must pay for 1,000 cubic metres of blue fuel soar to USD 485.50 from USD 268.50 after Russia imposed two price increases in three days that reflected its deep displeasure with the ex-Soviet nation's new westward course.
Energy Minister Yuriy Prodan called the new rate "political" and vowed to explore solutions that included a heavier reliance on coal - a polluting resource whose consumption has imperilled the air quality of nations such as China.

"We are now reviewing our electricity and fuel balance for 2014 with a view of using as much domestic coal as possible at the expense of natural gas," Prodan told a cabinet meeting in comments posted on the government website.
Ukraine has relied on coal throughout much of the past century despite efforts by global institutions such as the World Bank to help Kiev phase out its use following independence from Moscow.
The International Energy Agency estimates that coal accounts for about 30 per cent of Ukraine's total energy supply compared to the 40 per cent of the balance assumed by natural gas.

The nation of 46 million on the EU's eastern frontier is rich in resources but still imports about 30 percent of its needs due to inefficiencies and heavy state subsidies to both households and industries.

Ukraine consumed about 50 billion cubic metres of gas last year of which it imported 28 billion cubic metres from Russia -- a figure it would like to reduce despite the penalties this might incur under the terms of its contract with Russia's state energy giant Gazprom.
"There is a probability of Ukraine reducing gas purchases from Russia," Moscow's VTB Capital investment bank wrote in a research note.

The hike in Russia's gas price to what Ukraine believes is now the highest in Europe is unlikely to hit consumers with full force because of Kiev's continued state subsidies programme.