Ukraine to Update Pipes, Storage
Ukraine state Naftogaz transport subsidiary Ukrtransgaz has adopted a ten-year plan to modernise the country’s gas transportation system (GTS), Ukrtransgaz said May 8. The company is seeking investors in both its gas transport and its gas storage systems.
The decision came as Gazprom’s gas flow through this country is expected to plunge. About half of Gazprom’s 194bn [Russian] m³ exports to EU passed through Ukraine last year. The transit of Russia gas via Ukraine in the first four months of 2018 however is already 9% lower year on year.
Kiev hopes to receive $3bn in transit fees this year but Gazprom CEO Alexei Miller warned last year that Russia plans to decommission compressor stations and send no more than 10bn-15bn m³/yr through Ukraine after 2020, when Nord Stream 2 and Turkstream are online, a warning he has since repeated.
The Ukraine plan includes the modernisation of underground gas storage facilities (UGS) but the plan must be approved by Kiev.
The plan includes rebuilding four compressor stations: Yagotin, Dykanka, Romny and CS 4 Bilche-Volitsa, a storage facility. The first procurement procedures are scheduled to begin before the end of June, for the Yagotin compressor station. The second will be CS 4 Bilche Volitsa, with both upgrades to be completed by end 2020, at a likely cost of hryvnia 7bn ($270mn).
Ukraine has the know-how to make turbines, shut-off valves and other components but Ukrtransgaz will also initiate international tenders, in which both foreign and Ukrainian companies will be able to participate in a transparent and competitive environment, it said.
"Naftogaz plans to reconstruct a significant number of new facilities, which is why there is a big need both in services and in equipment. All necessary work and equipment will be the subject of open competitions," Naftogaz CEO Andriy Kobolev said. "Together with our European colleagues, [German] Ferrostaal Industrieanlagen, we will visit the main Ukrainian producers of oil and gas equipment to start talks on the transfer of technical documentation and the location of new technologies," Ukrtransgaz temporary CEO Andriy Khomenko said.
Developing UGS would shield Ukraine from short-term supply shocks. It had to buy gas at short notice when Gazprom decided that the Stockholm settlement was not symmetrical and refused to supply the gas it had agreed to.