South Stream may halve value of Ukraine gas network
Published by Elizabeth Corner,
Senior Editor
World Pipelines,
The South Stream gas pipeline, which bypasses Ukraine, may halve the value of Ukraine’s gas transportation system (GTS), according to Andrey Kobolev, head of Ukraine’s national oil and gas company Naftogaz.
After the Russian–led South Stream project is complete and working at full capacity, the value of Ukraine’s GTS may fall as much 50% from the present estimate of US$ 25 - 35 billion, according to analysts.
The Ukrainian GTS needs an upgrade as soon as possible, sources confirm.
On 24 July Ukraine’s Parliament rejected the second reading of a bill that would allow EU and US companies to buy up to 49% of the oil and gas company Naftogaz and co-manage the national pipelines.
Following thus decision, Prime Minister Arseniy Yatsenyuk said he was resigning, but on Monday he said he reversed his decision and returned to the office. He said that the Rada will reconsider the bill to outline operators of the GTS involving US and European investors at the next extraordinary meeting on 31 July.
Ukraine is Russia’s major gas conduit to Europe. Currently the Ukraine pipeline delivers 175 million m3/d of gas from Russia to neighbouring European countries, which is about half of Russia’s total gas supplies to the EU or 15% of total EU natural gas consumption.
South Stream subtractions?
Commissioning of the South Stream pipeline by Russia may reduce Ukrainian gas transit by 60 billion m3, state company Naftogaz of Ukraine Chairman of the Board Andrei Kobolev said on Tuesday.
“Now transit is already 86 billion m3 against the previous 110 - 120 billion. It has already dropped because of Nord Stream,” he said.
Once South Stream is constructed, Ukraine “can find itself in a very difficult situation”.
According to Naftogaz company statements, Russian gas transit through Ukraine dropped 7% in physical terms year-on-year to 36.571 billion m3 from 39.353 billion m3. In the reporting period, the company sold on the domestic market 15.814 billion m3 worth 30.443 billion hryvnias (US$ 2.54 billion) against 15.796 billion m3 worth 31.994 billion hryvnias (US$ 2.66 billion) a year earlier.
Edited from various sources by Elizabeth Corner
Read the article online at: https://www.worldpipelines.com/business-news/30072014/south-stream-may-halve-value-of-ukraine-gas-network/
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