Naftogaz head: Ukraine needs a European company to manage its gas transport system

To keep its status as a transit country, Ukraine needs to get a European company to manage its natural gas transportation system, the head of NJSC Naftogaz of Ukraine, Andriy Kobolyev proposed.

"The ultimate goal of the process of creating a separate GTS operator is to involve a European company... that has its own interests. In fact we want to share a part of our business to make them help us guarantee that transit through the territory of Ukraine will remain after 2019," he said on Channel 5 on January 4.

Kobolyev explained that to date only three companies have displayed their interest in managing the Ukrainian gas transportation system. They are currently in negotiations. He also reminded viewers that if Gazprom realizes its projects for the construction of two lines, Turkish Stream and Nord Stream 2, Russia will be able to abandon the transit of gas through Ukraine.

"It is my deep conviction that without a European company’s involvement in Ukrainian gas transit it will be very difficult to keep the business in Ukraine because there is a very strong competitor making the Europeans a very interesting offer: ‘let us build you another pipe at our cost.’"

At the same time, the head of Naftohaz said that denying the transit of Russian gas through the Ukrainian transportation system would lead to an increase transit costs for Europe due to lack of competition.

"The second step will be difficult for Europeans. If this happens and the Ukrainian gas transportation system ceases to be, then the gas from the bypass will go from cheap to expensive. You have to pay for everything one day but, unfortunately, not everybody understands it," Kobolev explained.

In November 2016 the Ukrainian Cabinet of Ministers decided to establish the PJSC Major Gas Pipelines of Ukraine within the framework of the division of Naftogaz of Ukraine categorized by areas of activity. The government decided that the property currently used by PJSC Ukrtransgaz for transportation of gas must be transferred to the Major Gas Pipelines of Ukraine within 30 days from the date of entry into force of the final decision of the Stockholm arbitration in the dispute between Naftogaz of Ukraine and the Russian Gazprom.

Ukrtransgaz, which is 100% owned by Naftogaz of Ukraine operates a system of main gas pipelines and 12 underground gas storage facilities in the country. The capacity of the Ukrainian gas transportation system is 288 billion cubic meters at the input and 178.5 billion cubic meters at the output, including 142.5 billion cubic meters to the European countries and 3.5 billion cubic meters to Moldova.

  Ukraine, EU, Russia, gas supplies