New York-based company GASE has signed a letter of intent (LOI) to joint venture with a leading compressed natural gas distributor and retailer in Ukraine. The collaboration is expected to be formally agreed and launch in June 2014 and meaningfully contribute to GASE revenues, higher margins, and earnings. “Few of our investors realize that Ukraine is the 8th largest NGV market in the world and the 2nd in Europe behind Italy,” said CEO of GASE Timur Kkromaev.
GASE’s partner is a private company with currently 10 CNG stations in Ukraine’s major cities. In 2013, it sold approximately USD $6.8 million of the gaseous fuel, with gross margins of nearly 30%. After the successful completion of addition operational and financial due diligence by GASE, both companies are expected to cooperate on a project to expand CNG distribution and filling stations in the country and penetrate high-volume cities with growing fleets running on natural gas.
According to GASE’s statistics, there are few factory-built models distributed by major automotive brands in the country. The vast majority of Ukraine’s natural gas fleet is composed of retrofitted vehicles, mainly fleets of heavy-duty vehicles such as buses and trucks.
Interest in NGVs is prevalent in large cities, where fueling infrastructure is quickly developing and where there is strong municipal support. Ukraine currently has 332 CNG stations nationwide and the fuel is considered an important component of the country’s energy market. In 2013 the consumption of CNG was approximately 6.4 billion cubic feet, an increase of 15% year over year.
Source: Great East Energy