Naftogaz acknowledged the threat of loss of Ukraine's gas transit

Europe will end up face-to-face with Gazprom, if it didn't invest in the Ukrainian gas transportation system, warned the head of Naftogaz.
Ukraine will have a hard time to keep the transit of Russian gas without the involvement of European companies to the management of its gas transportation system (GTS), said in an interview to Ukrainian Channel 5 the head of Naftogaz Andrey Kobolev.

"I am deeply convinced that if European companis aren't attracted into the Ukrainian transit, its [transit] preservation through our territory will be extremely challenging. I would like to emphasize that there is a fairly strong opponent, who prepared for their European partners an advantageous offer, including Gazprom's readiness to build yet another pipe on its own account," said Kobolev.

If Nord Stream 2 and Turkish Stream projects are implemented, Moscow will be able to stop transit through Ukraine completely, said Kobolev. However, in this case, the Russian Gazprom will be able to increase prices in Europe, he said: "Eventually, everything should be paid for."

Kobolev have repeatedly called for European investors in the Ukrainian gas transportation system and even named the desired period: the end of the arbitration dispute with Gazprom. He proposed to create a new legal entity owned by the State Property Fund of Ukraine under the proposed name of Main Gas Pipelines in Ukraine. This structure will become the operator of the Ukrainian GTS, and that's where foreign investors will be needed. 

Gazprom's contract with Ukraine for gas transit expires in 2019. The head of Gazprom, Alexey Miller, did not rule out negotiations with Ukraine on a new agreement. Arbitration in Stockholm, the dispute between Gazprom and Naftogaz, has been on since 2014, the amount of Naftogaz claims to Gazprom is approaching $30 billion, while Gazprom wants to recover about $32 billion from the Ukrainian party.

Gas bypassing

In the summer, Naftogaz accused Gazprom of blackmailing: the deliberate reduction of transit through Ukraine to deprive the country of the transit revenue and show the reliability of Nord Stream to Europe. Gazprom export referred to the weather factor and reduced consumer applications. According to analysts, Gazprom uses the opportunity to redirect flows through the Nord Stream to bypass Ukraine.

Forbes columnist Kenneth Raposa on December, 30, wrote that, according to European network operators (ENTSOG), the volume of gas supplied from Russia to Europe through Ukraine, once again significantly reduced while maintaining the total volume of deliveries of Gazprom. This is due to the increase of supply through Nord Stream and in particular on its eastern allotment of OPAL. So, a week before Christmas. transit through OPAL grew from 57.1 million cubic meters per day to 80.5 million cubic meters, and only 121 million c.m per day came to Slovakia via Ukraine instead of 149 million cubic meters.

According to the analyst, Kiev should take into account the transit growth along the "northern route" and improvement of relations between Turkey and Russia, and think what will happen to the country's energy system, when the flow of "easy money" for the transit of Russian gas will come to naught. Raposa believes that Ukraine needs to develop its own energy system, andNaftogaz must reform.

According to German operators, as of January 4, Nord Stream worked with a capacity of over 168 million cubic meters per day (61.3 billion cubic meters on an annualized basis), representing 111% of its design capacity (55 billion cubic meters. m per year), and OPAL worked at 105% of design capacity (36 billion cubic meters annualized). Prime Minister Vladimir Groisman said yesterday that Ukraine had increased the transit in 2016 by 23% to 82.2 billion cubic meters, and in compliance with all contractual obligations.