Engie Takes Ukrainian Capacity Position

French Engie signed a capacity agreement with transporter and storage operator UkrTransGaz (UTG), during a French-Ukrainian business forum held in Paris on October 28.

The agreement is a framework contract allowing Engie to book capacity from this winter. This makes Engie the first European energy player to be actively involved in Ukraine's wholesale gas market, Engie said the same day. There is spare capacity in both the pipes and the storage facilities owing to falling industrial demand and alternative delivery routes from Russia to Europe.

Last year Engie became Ukraine's main western supplier of natural gas, providing 3.5bn m³ mainly to UTG parent company Naftogaz Ukrainy, thus "contributing to the country’s security and diversity of supply," it said. At the time it was seen as a way of offloading some of its take-or-pay commitments in a way that also benefited Ukraine. Engie is trying to reduce its purchase commitments through arbitration.

In the summer of this year Engie established Engie Energy Management Ukraine to pursue "sustainable and profitable activities for major industrial customers on the wholesale natural gas market (imports, transmission, storage, trade) and potentially as a second step on the electricity trade market."

Engie also has close ties though with Russian exporter Gazprom, dating back decades. And its chairman Gerard Mestrallet met the CEO of Gazprom Alexei Miller on October 4 and reaffirmed the intention of Engie to facilitate Nord Stream 2, a 55bn m³/yr pair of pipelines that follow the route of Nord Stream, in which Engie is a partner. Ukraine is bitterly opposed to both pipelines as they provide Moscow with an alternative route to market, depriving it of transit fees. 

So the boss of Engie's Global Energy Management Business Edouard Neviaski stressed that Engie was "a long-term partner of the Ukrainian economy financing and development."

William Powell