Ukraine Starts Pipeline Operation Talks

The Ukrainian government has started talks with companies that are potential partners in managing the Soviet-era Ukrainian gas transmission system (GTS), said the deputy prime minister Volodymyr Kistion February 23.

"We started consultations with the first seven international companies that showed interest in the joint management of the gas transmission system of Ukraine," he said.

The bulk of the pipeline system operator's revenue comes from the shipping of Russian gas to Europe, which brings in several billion dollars in an average year; but also now the company is marketing storage services as well as north-south and west-east gas transmission capacity.

According to Kistion, Ukraine already has proposals from European gas consortia including: Eustream and Snam; Dutch Gasunie and French GRTGaz; Polish Gaz-System; Greek Desfa, Spanish Reganosa – which has expanded from being a regasification terminal operator to being a certified transmission system operator – Germany Verbundnetz Gaz, Belgian Fluxys and Romanian Transgaz.

This month the Swedish arbitration court is expected to rule on whether or not Gazprom violated its ship-or-pay agreement with Naftogaz, after which it will become possible for the pipeline system to be spun off and operated independently of Naftogaz, which also supplies and trades natural gas.

Also that day there was a round table on co-operation between Naftogaz, the government and parliament, where Naftogaz CEO Andriy Kobolyev suggested involving parliament in developing criteria for the selection of an international partner. “I believe that at this stage, it makes sense for parliament to join the process of forming the criteria for selecting the winner. The criteria should be heard in parliament quickly and approved,” he said. Kobolyev added that this would make it easier to identify a winner.

Previous, post-Soviet attempts by Ukraine's government to reduce the state's control over the pipelines, including offering concessions to foreign operators, have been blocked by parliament, fearful of losing a strategic asset.