The terms of the regulatory document on reforming the gas transmission system management system contradict the interests of Gazprom, with which the Cabinet of Ministers is determined to find a compromise on gas supply issues.
The government of Arseniy Yatsenyuk has successfully completed its lobbying for legislative initiatives that will shape the future of the Ukrainian gas transportation system. Today, the law "On Amendments to Certain Laws of Ukraine Regarding the Reform of the Management System of the Unified Gas Transmission System of Ukraine" comes into force.
Conflicting terms This document permits the leasing of domestic gas pipelines and underground gas storage facilities by foreign companies, but without the right to alienate them. It is understood that the Ukrainian state will own and operate the GTS, holding at least 51% of the shares in the management company. Only companies from the European Union or the United States will be allowed to partner with the GTS operator. The final decision on such a company's participation in the authorized capital of the GTS operator will be made by the Verkhovna Rada. A similar scheme is envisaged for the participation of foreign companies in a venture based on underground gas storage facilities. To comply with the law, two public joint-stock companies must be created within the framework of Naftogaz of Ukraine: "Main Gas Pipelines" and "Underground Gas Storage Facilities of Ukraine." Prime Minister Arseniy Yatsenyuk, justifying the need for such reform, spoke of a desire to improve the country's energy security and eliminate the risk of the gas transmission system coming under the control of Russia's Gazprom. However, the adopted law cannot completely rule out such a scenario. The EU's largest energy holdings, whose interests the Cabinet of Ministers is counting on, cooperate closely with Gazprom not only on gas purchases but also on infrastructure projects. Therefore, through its European partners, the Russian monopoly will also be able to influence the terms of management of the Ukrainian gas transmission system and underground gas storage facilities. US companies are less vulnerable to such influence. In September, Naftogaz of Ukraine plans to hold a presentation of its gas transportation infrastructure for them. The state holding is also preparing to organize a similar meeting in Vienna (Brussels was initially discussed – Forbes) with potential European partners. Yuriy Vitrenko (Read more about it in the article Yuriy Vitrenko, oil and gas business mogul), chief adviser to the NAC board of directors Andrey Kobolev (Read more about it in the article Andrey Kobolev. An unnoticed "veteran" of the gas pipeline.), noted that, in addition to investments in the modernization of the GTS, Western companies will also introduce modern technologies. The government's intention to transfer the functions of gas transmission system and underground gas storage facilities (UGS) operators to new entities is controversial, given that Naftogaz remains a party to the transit contract with Gazprom, which is in effect until 2019. Both Moscow and Brussels are interested in the stability of this contract. Furthermore, conflicts could arise between individual GTS and UGS operators, leading to uncoordinated operations, threatening the efficient operation of the interconnected gas transportation infrastructure. The Difficulties of Compromise In pursuing his plans against the Russian gas monopoly, Arseniy Yatsenyuk intends to seek a compromise with the Russian monopoly on contentious issues. These concern the repayment of Naftogaz's debt to Gazprom (according to the Russian side, it has reached $5,3 billion), as well as ensuring stable fuel transit under Gazprom's contracts with EU countries. Furthermore, the Cabinet of Ministers is interested in resuming gas imports from Russia, which the Russian side suspended on June 16 due to the accumulated debt. The Ukrainian government believes that to successfully navigate the current autumn-winter season, Ukraine should purchase approximately 5 billion cubic meters of Russian gas. However, Arseniy Yatsenyuk predicts that the country will abandon such purchases within the next five years. "We're still a long way from victory. Victory means we stop buying Russian gas altogether. It won't be in a year or two, but within five years, we can say that Ukraine will diversify its gas supplies and cease to be dependent on Russia," he noted. Trilateral talks between Ukraine, Russia, and the European Commission in September should facilitate the resolution of gas disputes. The tentative date for these talks is September 16, Yuriy Vitrenko announced yesterday, citing agreements with Klaus-Dieter Borchardt, Director of the European Commission's Internal Energy Market Department. "We spoke with Mr. Borchardt, and he said that the current working deadline for the meeting is September 16. Several cities are being discussed: Vienna was discussed for September 16," Vitrenko explained. The situation is complicated by the fact that the Verkhovna Rada in August passed a law allowing for the imposition of over 20 types of sanctions against Russia due to the armed conflict in Donbas. These include the cessation of transit of Russian energy resources. Ukraine is also insisting that European companies transfer Russian gas purchases from Ukraine's western border to Russia's. However, this initiative was met with little enthusiasm, not only at Gazprom but also in Brussels. According to Valentin Zemlyansky, Director of Energy Programs at the Center for World Economy and International Relations at the National Academy of Sciences of Ukraine, Ukraine and Russia's gas problems can only be resolved in the context of resolving the entire conflict potential that has accumulated between the two countries.
The terms of the regulatory document on reforming the gas transmission system management system contradict the interests of Gazprom, with which the Cabinet of Ministers is determined to find a compromise on gas supply issues.