Ukraine Opens Up its Gas Pipes
23 Apr, 2012, 08:28 ET
KIEV, Ukraine, April 23, 2012 /PRNewswire/ --
Ukraine has opened up its gas distribution and storage system, making its energy market more attractive to foreign investors and giving European consumers the benefit of greater competition through its pipes.
The decision by Ukraine's National Commission of Energy Regulation (NCER) fulfills a requirement to modernize its pipeline that was spelt out in an agreement between Ukraine and the European Union that was ratified by the Rada (parliament) in 2010.
It also ends the possibility of a distribution monopoly by Russia's Gazprom.
The new rules for gas pipeline operator Ukrtransgas require that it allows the transit, export, and storage of gas by any company throughout its nationwide network.
"The gas producer, if Ukrainian or foreign, receives legal guarantees that it won't be refused from transporting gas through the Ukrainian gas system or store it in the country," a Ukrainian government spokesperson said.
"European users benefit from this regulation as it allows them to buy gas from Gazprom at the Ukrainian-Russian border (delivery points) and then transport it through Ukraine to western Europe," he said.
Oil and gas producers have been quick to praise the "de-monopolisation". Russian oil giant Lukoil said: "Practically, it is a guarantee of free gas transport to European markets for extractors."
The landmark reform is a timely boost for Ukraine's own gas extraction industry which accounts for 20 billion million cubic metres of natural and shale gas per year because now there is more incentive to search for and develop new reserves.
Ukrainian extractor TNR-BP says it wants to be among the first players in the newly liberalised market saying: "It would be fair if the first to benefit from such access were companies already leading extracting activities in different regions of Ukraine."
On top of the economic benefits to the Ukraine the political aspect of these reforms cannot be missed. The government of President Viktor Yanukovych last month initialed an Association Agreement with the EU - the first step towards EU membership.
Fulfilling the undertaking to liberalise its gas infrastructure can only help that process.
It is also a set-back for Russia's Gazprom, which had proposed that it controls Ukraine's gas network on the basis that it would be cost-beneficial to its neighbour.
SOURCE Ukraine Foreign Affairs
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