KIEV, Nov. 27 – The government on Tuesday scrambled to contact Gas Natural of Spain after the company flatly denied reports of its involvement in $1 billion liquefied natural gas terminal project in Ukraine.

The bizarre twist comes a day after a person posing as a representative of Gas Natural signed an agreement with the government making the Spanish company the leading investor in the project.

Gas Natural, in an emailed statement, said it "has no agreement signed for investing in the LNG plant in Ukraine."

"Nor is it the leader of the consortium for the terminal. Nor is it carrying out studies, nor does it have representatives in Ukraine working on this."

"We totally deny any information published by various media," the company said.

The development is an embarrassment for the government, which has spent two years actively promoting the project, supposed to reduce dependence on Russian natural gas.

Ukraine on Monday broke ground on the project and started building a 42-km gas pipeline linking the future terminal in Pivdenniy near Odessa with the country’s massive gas pipeline network.

No investment was required from the Spanish company for building the pipeline, which is financed by Ukrtransgaz, a pipeline subsidiary of the national energy company Naftogaz Ukrayiny.

Prime Minister Mykola Azarov said Monday the beginning of the construction was “the historic moment” and “the first real big step to ensure energy independence of Ukraine.”

Reacting to the statement from the Spanish company, Ukraine’s State Investment and National Projects Management Agency, which supervises the LNG project, said the developments were a “technical disagreement independent of the Ukrainian party.”

The agency said it was contacting Gas Natural Fenosa of Spain trying to sort out the issues.

The agency said it has been dealing with Gas Natural Fenosa Engineering (Socoin) ever since it has signed a contract on October 10, 2011 to conduct a feasibility study of the terminal project. The study was successfully completed earlier this year.

Tomas Reukauf, the head of German operations of Gas Natural Europe, and Jordi Sarda Bovehi, an alleged representative of Gas Natural Fenosa, joined a meeting of potential partners of the LNG project on September 15, 2012, in Yalta, the agency said. The meeting was led by Energy and Coal Industry Minister Yuriy Boyko.

Jordi Sarda Bovehi is the person who had signed the agreement with Vladyslav Kaskiv, the head of the State Investment and National Projects Management Agency, making the Spanish company the leading investor in the project.

The Ukrainian government will take 25% stake in the terminal, while investors, led by Gas Natural SDG, will own the remaining 75% in the project.

The first stage of the project calls for using a floating re-gasification and storage facility that will be able to handle imports of 5 Bcm of gas annually in 2016.

The second stage of the project calls for building the onshore terminal that will double the capacity to 10 Bcm of gas annually and is expected to be completed in 2018.

Ukraine on Monday also signed an agreement with Excelerate Energy L.P. of the U.S. that calls for leasing a floating re-gasification plant for the LNG. (nr/ez)