Ukraine gas network will not be unbundled in 2016 - source

03 March 2016 11:56 Source:ICIS
Dynea looks east in Kiev expansion

Ukraine’s gas transmission network will not be unbundled this year as originally planned, Yury Vitrenko, Naftogaz director for business development, told ICIS.

Speaking on the sidelines of the Ukrainian Energy Forum in Kiev, Vitrenko said the transit contract between Naftogaz and Russia’s Gazprom could not be transferred to Ukrainian grid operator Ukrtransgaz without key elements being changed.

One example is that Ukraine wants no differentiation between cross-border transport and internal transmission tariffs, which clashes with the transit agreement.

“The gas reform aims at creating equal rules for all companies, and the transit agreement does not allow change to transit tariffs and exchange information on shipping code pairs,” Vitrenko said. He added that another reason Naftogaz could not pass the transit contract to Ukrtransgaz is that it would not be able to use its supply deal with Gazprom.

The ten-year transit agreement was signed in 2009 in tandem with a new supply contract, with the transit tariff linked to the oil-indexed price of gas.

Observers believe the transit contract will not be revised until expiration in 2019, because Gazprom will not want to compromise its ability to deliver to Europe.

Vitrenko said it may change next year, when the Stockholm arbitration court is expected to rule on a dispute over the transit contract conditions.

Naftogaz submitted the unbundling plan to the Energy Community Secretariat last month. Representatives of the Ukrainian company and the European Union will meet in Vienna on 14 March to discuss the proposal. Vitrenko emphasised that despite this, the unbundling was dependent on the transit contract being renegotiated.

Leonid Unigovsky, director at consultancy Neftegazstroiinformatika, said that without unbundling market liberalisation is impossible because “a state-owned trader cannot dictate to a network operator what to do. Currently there is an opportunity for direct influence.”

Privatisation option

Despite the postponement of the unbundling, reform of Naftogaz is expected to continue, with different scenarios of privatisation on the table.

Vitrenko supports a plan to privatise all companies within the Naftogaz group, with the central company to be eliminated by 2020.

He said this would allow privatisation of some parts, such as the gas producing division Ukrgazdobuvannya, without waiting for the privatisation of Ukrtransgaz. ekaterina.kravtsova@icis.com

By Ekaterina Kravtsova