Interest in Ukraine-Romania gas export capacity double that expected, Ukrtransgaz

15 May 2018 15:41 Source:ICIS

LONDON (ICIS)--An open season for export capacity on the Ukrainian-Romanian border has been oversubscribed, as companies bid for more than double the offered capacity, the country’s grid operator Ukrtransgaz told ICIS on Tuesday.

A total of 11 international shippers and producers expressed an interest in export capacity at the Isaccea 1-Orlovka on the Romanian-Ukrainian border starting from 2019.

Even though Ukrtransgaz offered capacity for 5 billion cubic metres/year, demand was in fact for more than 10bcm/year, Sergiy Makogon, director of strategy and business development at Ukrtransgaz told ICIS on Tuesday.

“Demand was huge, with 11 well-known international shippers and producers applying,” he said.

Ukrtransgsaz launched a non-binding assessment procedure on the Transit-1 pipeline at the end of March, a trunkline along the trans-Balkan route to gauge interest in the transport of natural gas from southern Europe to Ukraine after 2019.

The trans-Balkan corridor has been used to deliver Russian-sourced gas to southern Europe and Turkey via Ukraine and Romania.

However the long-term transit contract on the Transit-1 line at the Isaccea 1-Orlovka interconnection point expired in 2016.

This means that with some minor investment the existing infrastructure could be used to establish a bidirectional north-south corridor that would allow companies which explore gas in the Romanian offshore section of the Black Sea to export volumes to Ukraine.

The route would be easiest and cheapest for the export of Romanian gas to Ukraine and further to central European markets because the pipeline runs parallel and very close to the Black Sea coast.

It would also allow Ukraine to remain an important transit corridor to Europe once its transit contract with Russia’s Gazprom expires in 2019.

According to Ukrtransgaz, the pipeline can be operated under EU rules, rather than Russian legacy contract terms from 2019, when Ukraine’s own transit contract with Russia’s Gazprom expires next year.

By Aura Sabadus