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No selling Ukraine’s gas transit system to Gazprom

July 24, 2014, 4:07 UTC+3 KIEV
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KIEV, July 24. /ITAR-TASS/. Selling Ukraine’s gas transportation system to Russia’s Gazprom would be unacceptable, Naftogaz of Ukraine CEO Andrei Kobolev said on Wednesday.

“This is an unacceptable scenario for settling the conflict,” he said, referring to the dispute with Gazprom over gas supplies and the price of gas for Ukraine.

Gazprom CEO Alexei Miller said his company had “no interest” in acquiring the Ukrainian gas transit system. “That ship has sailed and it seems it did so yesterday,” he said.

“It belongs to no one. There is no owner. The gas transportation system does not belong to Naftogaz of Ukraine but it belongs to the Ukrainian government. And before modernisation or cooperation can be discussed with anyone, it [the system] should appear on the books of some business entity. Property and legal issues have to be settled first,” Miller said.

He believes it necessary to “change about a dozen Ukrainian laws before doing something with the gas transportation system” the value of which he said “is not very high”.

In early July the Ukrainian parliament turned down the government’s reform plan for the national gas transportation system even though Energy and Coal Industry Minister Yuri Prodan, who presented the draft, assured the deputies that its adoption would “make it possible to reform Naftogaz of Ukraine and increase the economic efficiency of the oil and gas sector to bring it in line with the EU requirements following Ukraine’s accession to the Treaty establishing the Energy Community and further reduce Ukraine’s energy dependence”.

The minister said that “only the state alone or the state (with no less than 51% of corporate rights) and an enterprise owned and controlled by residents of EU countries, the United States or the European Energy Community can establish and own the entity to act as the operator of underground gas storage facilities”.

According to the proposed draft, the gas transportation management system was supposed to be reorganised into two public joint stock companies: Trunk Gas Pipelines of Ukraine and Underground Gas Storage Facilities of Ukraine.

Parliament-appointed Prime Minister Arseny Yatsenyuk said this law “will allow us to invite our European and American partners to operate and modernise the Ukrainian gas transportation system, with the Ukrainian state retaining control over the system”.

However some deputies spoke against the transfer of the ownership rights to the gas transportation system to private companies and insisted that it be owned solely by the state.

The throughput capacity of the Ukrainian gas transportation is 288 billion cubic metres system at the entrance and 178.5 billion cubic meters at the exit, including 142.5 billion cubic metres to European countries and 3.5 billion cubic metres to Moldova. Natural gas transit through Ukraine to Europe and CIS countries in 2011 increased by 5.7% from 2010 to 104,197,067,000 cubic metres, including to Western Europe by 5.9% to 101,098,013,000 cubic metres, but decreased by 2.4% to 3,099,054,000 cubic metres to CIS countries.

Ukraine’s gas transportation system consists of 72 compressor stations, 110 production facilities and 1,451 gas distribution stations. The overall length of gas pipelines operated by the company is 38,600 kilometres, including 22,200 kilometres of trunk pipelines and 16,400 kilometres of extensions.

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