Western investors preferred to invest in Nord Stream 2 rather than in the Ukrainian gas transportation system
The Government of Ukraine has approved a restructuring scheme for Naftogaz of Ukraine, according to which the company will allocate gas transportation and, possibly, its storage (underground storage facilities) to separate legal entities owned by the state: Trunk Gas Pipelines of Ukraine and Underground Gas Storage Facilities of Ukraine (UGS), reports “Kommersant”.
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Now, the publication notes, together with experts from the Secretariat of the Energy Community (SEC, an advisory body of the EU and associated countries on energy policy), by November 1, Ukrainian departments will have to develop the conditions and procedure for the concession of “property that is used for gas transportation and is not subject to privatization.”
“But the GTS cannot be separated until a decision is made by the Stockholm Arbitration Court on the dispute with Gazprom,” the publication emphasizes. – Thus, the Ukrainian GTS, as now, will remain on the balance sheet of the State Property Fund, and Trunk Gas Pipelines of Ukraine will become only a concessionaire and operator of the system. This decision contradicts the initial position of the SES, which believed that the operator, according to the Third EU Energy Package, should be the owner of the pipe. According to the SES, currently the concession legislation of Ukraine cannot provide the operator with a sufficient degree of commercial freedom and independent management if he is only a concessionaire. In addition, such a configuration is likely to be unattractive to potential foreign investors whom the Ukrainian authorities would like to attract to the GTS. Let us recall that Kyiv adopted a special law according to which only European and American companies, but not Gazprom, can become investors in the GTS. True, the main buyers of Russian gas in Europe, who might be interested in participating in the GTS, decided to become shareholders of Gazprom’s alternative project Nord Stream 2, bypassing Ukraine.”
“Owning even a minority share provides the investor with more serious guarantees than a concession,” notes Andrey Polishchuk from Raiffeisenbank. In general, in his opinion, the key issue is the volume of transit of Russian gas, the payment for which could allow investors to return their investments.
In addition, according to Gazprom’s calculations, the newspaper writes, after 2019, gas transit through Ukraine will drop to 10-15 billion from the current 60 billion cubic meters per year, and such a volume will not allow the current costs of the Ukrainian gas transportation system to be repaid.
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