Feedback
Ukrainian gas hub: What does memorandum on Ukrainian gas transporting system mean?

Author : Serhiy Sapegin

13:20, 12 April 2017
Ukrainian gas hub: What does memorandum on Ukrainian gas transporting system mean?

Author : Serhiy Sapegin

European companies are interested in improving the reliability of gas supplies to the EU market through Ukraine, according to provisions of the EU Energy Security Strategy. They are the recipients of gas that transit through Ukraine, and therefore are interested in the stability of supplies and the reduction of risk components, including from the technical side

13:20, 12 April 2017

Read the original article at 112.ua

Open source

The Memorandum of Understanding signed by the Italian company Snam, the Slovak Eustream, Naftogaz of Ukraine and Ukrtransgaz is aimed at joint assessment of cooperation opportunities in the field of operation and development of the gas network in Ukraine. This is a preliminary stage for possible investments. Within the framework of the Memorandum it is supposed that the companies will jointly determine ways to improve the gas transportation network of Ukraine, the opportunities to make it efficient, developed and competitive.

This memorandum is a multilateral agreement that describes only the general line of action. Therefore, later working groups will be established to prepare proposals for further cooperation. At the same time, the signing of the document in the presence of the EU Commissioner for Climate Action and Energy, Mr. Miguel Cañete, Minister of Economic Development of Italy Carlo Calenda and Energy Minister of Ukraine Igor Nasalik speaks about good prospects for our further cooperation.

Prime Minister of Ukraine Volodymir Groysman asserts that other European operators also have expressed interest in cooperation. Forming such a "gas pool" in the future will ensure diversification of reverse natural gas supplies and the possibility of choosing the best proposals for cooperation, including the creation of joint conditions for the safe transit of gas to Europe through Ukraine. The final decision regarding partnership should be made on the basis of the provisions of the Law of Ukraine "On the Natural Gas Market". Accordingly, further we should announce the competition, on which the most favorable offer for Ukraine will win.

European companies are interested in improving the reliability of gas supplies to the EU market through Ukraine. This is in line with the provisions of the EU Energy Security Strategy. They are the recipients of gas that transit through Ukraine, and therefore are interested in the stability of supplies and the reduction of risk components, including from the technical side. It is not a secret that compressor stations provide the transfer of gas to the GTS, the overwhelming majority of which are operated by Ukrtransgaz for 25 years or more. In the configuration of such compressor stations metal-consuming, low-efficiency and obsolete equipment of the 80s of the last century was used. This includes gas-pumping units, some of which have exhausted their service life and operate under conditions of extended life.

Related: "Kill" Kim: How US and China are going to solve North Korean issue?

In July 2016, the NCRECU decided to amend the development plan for the state-owned company Ukrtransgaz for 2016-2025. At the same time, the total amount of investments for the modernization of the gas transportation system was announced in the amount of 69.9 billion UAH. The full integration of the Ukrainian gas transportation system into the European ENTSO-G gas transportation system and further deepening of cooperation with the countries of Central Europe in order to increase the reliability of energy supplies is also seen promising. In addition, the emphasis was made on adapting the capacity of the GTS to the operating conditions of the pan-European natural gas market.

Moreover, in theory, the signing of this Memorandum opens up an opportunity for European operators to use the infrastructure of Ukraine in their own interests after the possible creation of an Eastern gas hub based on Ukrainian UGS facilities with a total capacity of 32 billion cubic meters and additional capacities for storage of natural gas (seasonal storage and storage of strategic reserves), when Ukraine has the opportunity and is ready to open to European consumers access to Ukrainian UGS facilities of up to 17 billion cubic meters.

The Italian company Snam S.p.A. is engaged in transporting, regasifying, storaging and distribution of natural gas and operates as a subsidiary of Eni SpA. Snam operates and develops the largest pipeline network in Europe (over 40,000 km), the largest storage infrastructure in Europe (19 billion cubic meters) and one of the first LNG terminals built in Europe. It is one of the largest European companies. Snam's investments in Europe are aimed at facilitating the integration of the European energy network and promoting gas as a key element of a sustainable energy balance.

Slovak Eustream is the owner and operator of one of the largest gas transmission systems in the European Union. The mission of Eustream is to transport natural gas from Slovakia to European markets. Eustream is a long-term partner of the Ukrainian gas transportation system, directly connected with Ukraine in both directions of natural gas flow.

Russia was also interested in the Ukrainian GTS. But now the interests of Gazprom are aimed at discrediting the Ukrainian GTS in the face of its European partners and making information pressure on the European Commission to create conditions for the Nord Stream-2 project agreement, as eastern neighbor estimates that the new gas pipeline will have to be built because of the " Ukraine's unreliability as a transit link”. With this in mind, I do not exclude the possibility that with further steps of the parties after the signing of the memorandum, new details may appear, which today remain outside the experts’ field of view.

Related: G7 communique urges Russia to stop aggression in Ukraine

Related: What National Bank Head Ukrainian banking system needs?

Related: Who needs reforms in Ukraine: Opinion poll

Topics:
Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

Comments
see more