Ukraine Seeks Partner for Pipeline Operation
Ukraine's state Naftogaz announced September 6 the start of an open bidding for investment and banking services related to unbundling the gas transmission system and the engagement of a qualified partner to operate the giant but ageing pipeline system, currently operated by subsidiary UkrTransGaz.
The winner will assess the risks related to the separation of gas supply from transmission and create the conditions for the successful selection of a qualified partner to operate the network and the commercial terms for doing so; and facilitate relationships with major stakeholders.
By law, the partner that is picked must satisfy parliament, after being approved by the council of ministers.
Previous attempts to allow third parties to operate the strategically important network have been shot down in parliament. The system needs investment but the government has not been forthcoming with a financial plan, leading to resignations at Naftogaz' supervisory board. And Gazprom has said it will only keep open enough compressor stations in Russia to ship about 20bn m³/yr from east to west, or about a sixth of the technical capacity.
However despite the difficult past, and an uncertain future, Ukraine is seeking to reinvent itself as a gas trading and storage hub for eastern Europe, and has set up European Union-style cross border services and storage contracts.
The date for unbundling is set at 30 days from from the effective date of the final decisions in the Stockholm arbitrations between Naftogaz and Gazprom. Still to be decided is the value of the gas Ukraine received but did not pay for in 2014; and the transit fees owed by Gazprom to Ukraine, under a ship or pay contract that was to run until 2019.
Bidders must demonstrate their material and technical resources, including offices in at least three EU countries, employees with relevant qualification and mergers and acquisition experience in oil and gas industry in EU countries within the past five years.
William Powell