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Ukrainian Gas System Unlikely to Find U.S., EU Investors

Published: July 5, 2014 (Issue # 1818)



  • If the South Stream pipeline project is completed, then by 2015 Ukrainian pipelines will no longer be needed for Russian gas exports.
    Photo: Gazprom

Ukraine's move Friday toward attempting to sell nearly 50 percent in its gas pipeline system to EU and U.S. investors does not mean that Western buyers will rush to take up the offer, as the system's value depends on a steady supply of Russian gas, energy analysts told The St. Petersburg Times.

Amid the current standoff with Russia over unpaid bills for gas imports, Ukraine's parliament passed a bill in its first reading Friday that envisages the creation of a Ukrainian gas transportation operator of which European and U.S. investors could own up to 49 percent.

The move appeared to be Ukraine's attempt to retain control of the revenues that transporting Russian gas to Europe brings, just as Russian state energy giant Gazprom moves towards construction of the planned South Stream pipeline, which will bypass Ukraine on its way to Europe.

Russia supplies about a third of Europe's total gas requirements via pipelines running through Ukrainian territory, and has coveted control of the transport system for the last two decades. Kiev has rejected attempts by Russia — Ukraine's main gas supplier — to take control of the transport system amid a series of acrimonious gas wars that have seen Russia's Gazprom turn off shipments to Ukraine several times in the past few years over unpaid bills.

Battling South Stream

The bill excludes Russia from ownership in the system by only accepting as shareholders companies owned and controlled by residents of the EU, U.S. or European Energy Community, of which Ukraine is a member but Russia is not. The company must also belong to the European Network of Transmission System Operators of Gas. The same conditions apply for operators of Ukraine's subterranean natural gas storage facilities.

Ukraine's Prime Minister Arseniy Yatsenyuk told parliament Friday that the energy situation in Ukraine is "critical" and "part of a war that Russia has rolled out against Ukraine."

"Russia is trying to tighten as many screws as possible on us," he said, according to the Ukrainian government's website.

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ALL ABOUT TOWN

Monday, July 28


Don’t miss a chance to see the latest achievements in robotics during the RoboDom interactive show, exhibiting more than 150 robots. The show will be at BUM center, 22/2 Gzhatskaya Ulitsa, until Aug. 3. The entrance ticket costs 350 rubles ($10).



Tuesday, July 29


A video of a Queen concert from 1986 will be shown today at 8 p.m. in Yaschik, 50/13 Ligovsky Prospekt.



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