Ukraine looks to replace gas with coal

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KIEV, Ukraine, Jan. 2 (UPI) -- The Ukrainian government said it secured a loan from the Chinese government to back a program aimed to substituting natural gas with coal.

The Ukrainian government said it could save as much as $1.5 billion per year through a program that would substitute about 140 billion cubic feet of natural gas with coal.

"A loan agreement between (state energy company) Natfogaz and State Development Bank of China on financing the program of natural gas substitution with Ukrainian coal worth a total of $3.6 billion against the Ukrainian government's guarantees was signed in the Ukrainian Cabinet of Ministers in the presence of Deputy Prime Minister Yuriy Boyko," a statement from the Ukrainian government was cited by Russia's RIA Novosti as saying.

Russian energy company Gazprom supplies about 60 percent of the natural gas consumed in Ukraine. Ukraine said recently it was cutting back on gas purchases from Russia despite a take-or-pay mechanism with Gazprom.

Kiev has lobbied for a better natural gas deal since 2009 negotiations broke a brief supply disruption. Former Ukrainian Prime Minister Yulia Tymoshenko is serving a seven-year prison sentence after being convicted on charges she abused her authority when helping to broker the 2009 deal.