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Last updated on April 24, 2014 at 21:24 EDT

EU Ready to Invest Into Ukrainian Gas Transporting System Modernization

October 25, 2012

KYIV, Ukraine, October 25, 2012 /PRNewswire/ –

The EU is set to contribute to the modernization of the Ukrainian gas transporting
system as soon as Ukraine finalizes terms of the project, said the Head of the Delegation
of the EU to Ukraine Jan Tombinski. Ukraine will come up with the project terms after
receiving the results of the GTS assets valuation.

At the moment, Baker Tilly Ukraine is valuing the pipelines and storage facilities of
Naftogaz. The company won the USD 510,000 tender to complete the work in Ukraine, reports
Bloomberg. Previously, the valuation of assets of the Ukrainian gas transporting system
was held in 2007 – the system was estimated to be worth almost USD 25 billion – and in
2009, then the price was nearly USD 10 billion.

Currently, Ukrainian gas transporting system is owned and managed by the state company
Naftogaz. The country plans to restructure the company in order to divide the functions of
gas transporting, purchasing, and selling between legally independent entities. In October
2012, the Cabinet of Minister of Ukraine discontinued the monopoly of Naftogaz on the sale
of imported gas.

In February 2012, Ukraine called for a tripartite gas consortium, featuring Ukraine,
the EU, and Russia as managers of Ukraine’s GTS. The modernization of the system would
become one of the main tasks of the consortium. It would be responsible for management of
the system and ensuring stability of gas supply to Europe. Ukraine expects to receive 34
percent share of the consortium, while Europe and Russia get 33 percent each.

Reportedly, Ukraine uses about two thirds of the estimated capacity of its gas
transporting system, which already supplies some 70 percent of Russian gas to Europe.
Renovation of the system would allow for the increase of the transfer capacity. It would
also be beneficial since building alternate gas transporting routes requires time,
financial and human resources, and creates unnecessary threats to the environment,
emphasized President of Ukraine Viktor Yanukovych at the time.

In May 2012, Russia announced its terms for joining the consortium – the ownership of
the gas transporting system had to be handed over to the consortium. Russia perceives the
third – European – participant in the consortium as a possible referee between Russia and
Ukraine, should any conflicts occur.

SOURCE Worldwide News Ukraine


Source: PR Newswire