EU Funds Ukrainian Storage Mega-Study (Update)

(Updates, with details of loan in paragraph 2.)

Ukraine’s government, gas industry officials and the European Union (EU) have begun an EU-funded study of gas storage facilities in Ukraine, following a meeting July 12 at the EU office in Kiev. Present also were Energy Community officials as well as consultants selected by the EC, Naftogaz Ukrainy said July 17.

The EC told NGW the money came from a €2mn ($2.3mn) technical assistance project financed by the EU bilateral program with Ukraine with three objectives: to prepare storage unbundling; to assess the technical state of play of the storage facilities and to propose a business model for integration into EU markets.

The eventual outcome could be the entry of Ukraine into Europe's gas storage markets – already overburdened with unprofitable assets – and the closure of some facilities that are under-used but which have valuable cushion gas for sale.

Naftogaz Ukrainy CEO Andriu Kobolev expressed thanks to the EC "for its constant support for introducing reform into Ukraine’s gas market. This project allows us to attract the best consultants to develop the best strategy for Ukraine’s unique gas storage infrastructure."

The project team will analyse which storage facilities are necessary for the efficient use of the country’s gas transmission system. The project is therefore important for the introduction of the law on natural gas, and carrying out Ukraine’s obligations regarding the de-merger of Naftogaz from gas transmission, it said. Ukraine has over 31bn m³ of working gas storage capacity, half of which is not used and which Naftogaz is seeking to lease out, but so far with limited success. Only French Engie has booked capacity, although other companies have expressed interest.

French Storengy, an Engie subsidiary, will carry out a technical audit of each facility and after analysing the preliminary data, the team will visit the site and produce a detailed technical evaluation.

Lawfirm CMS Cameron McKenna Nabarro Olswang will analyse the legislation in place in relation to the Third Energy Package and other EU normative acts. The company is already up to date with the legislative limits and obstacles preventing the broader use of Ukrainian storage. The juridical part of the research will include drafting laws and lesser directives and decisions.


William Powell


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