Business news from Ukraine

“Ukrtransgaz” plans to invest almost UAH 1 bln in development of natural gas storage facilities in 2024

Ukrtransgaz plans to invest UAH 998.277 million in the development of natural gas storage facilities in 2024 in accordance with the gas storage development plan for 2024-2033 approved by the National Energy and Utilities Regulatory Commission (NEURC) at a meeting on Tuesday.

“We are moving towards 100% fulfillment of investment programs in general,” said Roman Malyutin, Ukrtransgaz CEO, at the meeting.

According to him, the approved plan provides for the reconstruction and construction of fixed assets of technological processes in the gas storage system, the development of critical infrastructure security facilities, including cybersecurity, and information technology.

According to the document, the company intends to invest UAH 472.355 million this year in the operation of gas storage facilities, UAH 415.988 million in the development of underground gas storage facilities, UAH 66.442 million in the modernization and purchase of vehicles, special machines and mechanisms, UAH 27.413 million in the purchase of diagnostic and inspection equipment and other devices, and UAH 16.079 million in industrial and administrative buildings.

In total, Ukrtransgaz’s gas storage development plan for 2024-2033 envisages an investment of UAH 14 billion 534.148 million.

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JSC Ukrtransgaz, acting as the operator of UGS facilities in Ukraine, has begun preparations for certification for the use of the capacities of its UGS facilities by EU countries, the press service of the company reported on Friday.
“Ukrtransgaz has already begun preparations for passing the independent EU certification introduced for gas storage operators. The company is confident of its successful completion,” it said.
Ukraine, as a member of the Energy Community, is ready to offer up to 10 billion cubic meters of its capacity for gas storage by EU countries.
“There is a corresponding positive and comprehensive experience of cooperation with foreign customers of services. They have already had the opportunity to be convinced of the reliability of gas storage in Ukraine, and they continue to store it today in our facilities,” the press service noted.
In turn, Gas Transmission System Operator of Ukraine (GTSOU) in the course of a joint presentation with Ukrtransgaz at a meeting of the South-East European Gas (SEEGAS) Initiative emphasized that the gas transportation infrastructure and UGS facilities of Ukraine can become the basis for strengthening European and regional energy security already on the eve of the next winter.
According to Olha Belkova, the director for relations with government agencies and international organizations at the GTSOU, in order to further strengthen the energy security of the region of Central and Eastern Europe, Ukraine and partners from Poland, Slovakia, Hungary, Romania, Moldova face the task of strengthening cooperation with countries such as Lithuania, Turkey, Greece and transatlantic partners.
She informed about the interest of Ukrainian traders in gaining access to LNG facilities in Europe. To transport gas to Ukraine from the Lithuanian and Polish LNG terminals, it is necessary to increase the guaranteed capacities on a long-term basis. There is also considerable interest in potential gas supplies from Greece and Turkey via the Trans-Balkan pipeline.

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PJSC Trunk Gas Pipelines of Ukraine made the first payment to JSC Ukrtransgaz in the amount of UAH 3.85 billion for corporate rights in the authorized capital of Gas Transmission System Operator of Ukraine LLC (GTSOU), the press service of Ukrtransgaz reported.
The company clarified that the payment was made as part of the fulfillment of contractual obligations assumed by the parties as part of the process of separating natural gas transportation from Naftogaz (unbundling).
The financial report of Naftogaz noted that the sale and purchase agreement for a stake in GTSOU provides for the group to receive an initial financial contribution of UAH 3.871 billion and regular variable payments over 15 years based on a dynamic price calculated according to a formula agreed by the parties. Accounts receivable were recognized at the date of sale of GTSOU according to the value of UAH 81.306 billion. In addition, on January 1, 2020, Ukrtransgaz sold its own gas to GTSOU, which is necessary for the operation of the system, for UAH 4.53 billion.
In January-September 2020, GTSOU received a net profit of UAH 20.277 billion, net income – UAH 44.827 billion.



The Ukrainian government on Wednesday will consider the revised bill on the list of state-owned facilities that are not subject to privatization, which envisages the retaining of at least 50% plus one shares in Ukrtransgaz, Ukrgazvydobuvannia and Ukrtransnafta and 100% in Ukrhydroenergo, Ukrenergo and Energoatom.
According to an explanatory note to the document available at Interfax-Ukraine, after the first consideration of the bill at a meeting of the Cabinet of Ministers on December 27, 2019, a conciliation meeting and a meeting of the government committee took place, as a result of which the lists underwent significant changes.
If in the first version the Ministry of Economic Development, Trade and Agriculture allowed selling up to 50% in all facilities, now their number has been reduced to 22, while for 135 facilities it is proposed to fix all their shares in state ownership.

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Reserves of natural gas in Ukraine’s underground gas storage facilities (UGS) as of August 21 had reached 17.4 billion cubic meters (bcm), which is the highest figure on this date since 2012.
According to the press service of Ukrtransgaz, the high pace of the current year has already led to the fulfillment of planned volumes for injection at four underground storage facilities (Solokhovske, Krasnopartyzanske, Proletarske, Krasnopopivske).
Currently, gas injection continues at Bilche-Volytsko-Uherske, Uherske, Dashavske, Bohorodchanske, Oparske and Kehychivske underground gas storage facilities, where the average daily pumping is about 75 million cubic meters.
According to Ukrtransgaz, at the same time, more than 270 companies today use the services of the company to store gas in underground gas storage facilities both in a common mode and in a customs warehouse mode. Compared to last year, the number of such companies rose by 40%.

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Ukrainian gas transmission system (GTS) operator JSC Ukrtransgaz (UTG) has addressed the European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) with a request to revise current modernization loan agreements for Ukraine’s section of the Urengoy-Pomary-Uzhgorod gas pipeline. UTG said in its press release that one of the reasons for which it is unable to implement the loan program was the operator’s failure to meet the financial stability requirements outlined in the loan agreements with the EBRD and EIB (due to tariffs for its services which have been set too low since the end of last year).
The company added that reliability and effectiveness of the Ukrainian section of the Urengoy-Pomary-Uzhgorod gas pipeline could be improved with a significantly smaller amount of assets (than it is envisaged in the loan agreements).
“For this reason the company is asking the EBRD to reduce the amount of its loan as long as a EUR 125 million investment (instead of EUR 300 million) is sufficient for the achievement of its primary goals,” reads the statement.
UTG also asked the financial institutions to hold consultations with the Ukrainian government in order to determine the extent of liability on the loan agreements for UTG and a new GTS operator as well as the mechanism for use of funds and loan servicing after the completion of the unbundling process in Ukraine.
As reported, UTG signed a EUR 300 million loan agreement with the EBRD and EIB (EUR 150 million from each) for the modernization of Ukraine’s section of the Urengoy-Pomary-Uzhgorod gas pipeline. Ukrtransgaz will also invest EUR 166 million of its own funds in the project.
Ukrtransgaz, a 100% subsidiary of Naftogaz Ukrainy, operates Ukraine’s system of trunk gas pipelines and 12 underground gas storage facilities.

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