June 26, 2015, Kyiv – Naftogaz of Ukraine is encouraged by Eustream’s acknowledgement of the fact that the present set-up of gas flows management at one of the region’s most crucial interconnection points is not in line with EU standards and supports Eustream’s suggestion to engage the concerned parties in development of an action plan that would bring the situation in compliance with the EU rules that regulate gas network usage.

“We are grateful to our Slovak partners for supporting the organization of the reverse flows via Slovakia to Ukraine. Thanks to these joint efforts we were able to significantly diversify our import routes”, said Andriy Kobolyev, CEO of Naftogaz.

“Nevertheless, the present situation is unacceptable under current EU energy and competition regulations. It damages the ability of Ukraine and eight additional European countries to freely buy gas in Western European markets. By controlling this principal interconnection point, Gazprom ensures its dominant position as supplier of natural gas in these markets”, added Kobolyev.

Bosnia, Bulgaria, Greece, Hungary, Macedonia, Romania, Serbia and Turkey could all diversify their gas supplies and source cheaper gas from the Western European gas market if the Slovakia-Ukraine interconnector operated in line with EU energy law. Therefore, the present situation seriously undermines interests not only of numerous gas consumers in Europe but also of gas producers and suppliers.

Setting the interconnector matter right involves signing a standard interconnection agreement, approved by the European Commission, between Ukrtransgaz, the Ukrainian TSO, and Eustream. This would establish a direct relationship between the two adjacent TSOs, in compliance with EU rules. Such an agreement has nothing to do with the supply contracts Gazprom has with its European clients. They will not be affected in any manner.

Ukrtransgaz also needs to start receiving shipping code pairs related to the volumes of gas transmitted across Ukraine from Gazprom. A refusal to provide this information, which Ukrtransgaz needs to perform its TSO functions in full, could be regarded as an intention of a dominant player to abuse its market position.

With these two tasks completed, Ukraine can step up further as an energy partner to the EU, significantly boosting the region's energy security and eliminating the need to invest billions of EU taxpayers’ money in redundant pipeline projects.

The interconnector's full capacity is nearly 115 bcm per year, and only 15 bcm of it is currently available for bi-directional gas flows. Ukraine's underground storages of 31 bcm amount to nearly a third of EU-28 total; almost a half of this capacity is currently unused.

 

PR Department «Naftogaz of Ukraine»