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.
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%.
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.
Ukrainian and Hungarian transmission system operators – Ukrtransgaz and FGSZ Ltd. – increased the technical capacity of natural gas transportation from Hungary to Ukraine by 14% at the point of GMS Beregadorets to 19.5 million cubic meters per day, the press service of Ukrtransgaz has reported.
The relevant agreements have been signed between Ukrtransgaz JSC and FGSZ Ltd, and will come into force on 30 May 2019.
“The new agreements enable a significant increase of the gas import capacity from Hungary to Ukraine. This development is particularly important in light of the preparations for the winter season 2020,” Ukrtransgaz said, recalling that to mitigate supply risks, Ukraine aims to accumulate 20 billion cubic meters of gas in its underground storages by the beginning of the next heating season.
Ukrtransgaz said that the Hungarian import direction has gained in popularity in recent years among Ukrtransgaz customers. In 2016, about 1 billion cubic meters of natural gas was imported from Hungary to Ukraine. In 2017 this figure rose to 2.8 billion cubic meters, and in 2018 it reached 3.4 billion cubic meters. Since the beginning of 2019, there has been additional year-on-year growth of 66% to 0.92 billion cubic meters.
“With tariffs for the exit points of the Hungarian gas transmission system from April to September at the competitive to European ones level, there is a strong possibility that the current growth trend will continue over the coming months,” the company said.
The operator of the gas transportation system JSC Ukrtransgaz has commissioned Kalush-2 gas distribution station (Ivano-Frankivsk region) after reconstruction, the press service of the company has reported.
The total investment in the reconstruction amounted to UAH 82 million. The station is equipped with automatic management systems with functional alarm systems and systems of automatic protection against pressure increase/decrease.
In addition, an ultrasonic gas flow measurement system is installed at the station.
“With the rapid development of industry in Kalush, the modernization and restoration of activities of chemical enterprises and, accordingly, increasing consumption volumes, the station will ensure a reliable and uninterrupted supply of gas to consumers,” the report said.
Kalush-2 gas distribution station, built in 1975, supplies gas to the city, nearby villages and industrial consumers from the Uhersko-Ivano-Frankivsk-Chernivtsi gas pipeline.
JSC Ukrtransgaz has created a new branch – Operator of Ukrainian Gas Storage Facilities, which will be responsible for the provision of gas storage services and operation of underground gas storage facilities.
The company said in a press release that the branch would consolidate all assets, processes and employees required for the provision of gas storage services. It is planned that the branch will start operating at a full capacity from January 1, 2019. The branch will function as a structural unit of Ukrtransgaz, without establishing a separate legal entity.
Ukrtransgaz is conducting preparatory work on the legal and organizational design of the operation of the branch, the redistribution of production and business processes, an inventory of existing assets and the transfer to the new branch of more than 1,700 specialists who support the operation of Ukrainian underground gas storage facilities.
“The creation of the operator is a consistent step towards the qualitative completion of the unbundling process, as a result of which the operator of Ukraine’s GTS [gas transmission system] will be finally separated from Ukrtransgaz after the current transit contract with Gazprom terminates,” Ukrtransgaz President Andriy Khomenko said.
Ukrtransgaz, a wholly owned subsidiary of Naftogaz Ukrainy, operates Ukraine’s gas transmission system and 12 underground gas storage facilities with 31 billion cubic meters of capacity.