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    Ukraine Adds Shell to its Supplier List


State Naftogaz says its gas transport system has passed its EU stress-test ahead of this winter. It has also pre-qualified a 14th company to a list of approved gas suppliers.

by: Mark Smedley

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Natural Gas News, Europe, Corporate, Import/Export, News By Country, Ukraine

Ukraine Adds Shell to its Supplier List

Ukraine's state gas importer Naftogaz Ukrainy this week said its gas transport system has been "successfully" stress-tested by the EU ahead of the winter. It also said that Shell has joined its list of pre-qualified gas suppliers.

Naftogaz said August 8 that it has extended the list of pre-qualified suppliers able to participate in Naftogaz’ tenders for 2017-18 gas imports under its loan agreement with the European Bank for Reconstruction and Development (EBRD), adding UK-based Shell Energy Europe to the list.

Previously 13 companies had pre-qualified for gas supplies under the EBRD loan in 2017-2018. Czech state CEZ, France's Engie and Polish state-run PGNiG have been unconditionally pre-qualified. Ten other companies are conditionally pre-qualified, including Axpo, EDF, RWE, SPP, Uniper and VNG (see link for full list). Thus Shell becomes the 14th listed and is "conditionally pre-qualified".

As Naftogaz has previously said, the pre-qualification procedure remains open for new participants during the entire effective period of the loan. Last month it said it intends to sign agreements with Sweden's Vattenfall and global trader Trafigura; neither though are yet among the 14 pre-qualified.

Naftogaz stopped importing from Russian giant Gazprom in late 2015, but continues to transit gas across its territory to EU and other markets. However gas sold by the 14 companies will have originated from a variety of EU and non-EU sources such as Norway and Russia.

Germany's role in such trade should not be underestimated. Additional gas data published this week by German thinktank AG Energiebilanzen, with the help of utilities association BDEW, show that first half 2017 gross gas exports by Germany increased by 82.5% year on year to 16bn m3 (172.2 TWh). The primary data source, Germany's Federal Statistical Agency, however declines for confidentiality reasons to disclose a breakdown of export markets. 

Regarding the stress-test, Naftogaz said August 9 that representatives of the European Commission's directorate general-joint research center (DG-JRC) together with officials of Naftogaz, Ukrtransgaz and Ukraine's energy and coal ministry undertook an assessment of possible crisis scenarios regarding gas supply disruptions to Ukraine for the winter 2017-18 season.

Naftogaz said the "beneficiary of the assessment" is Ukraine's energy and coal ministry as the central agency responsible for security of gas supply; it noted this is the second year of the three-year technical cooperation scheme with the EU that launched in 2016.

PGNiG executive to head Ukrtransgaz

Naftogaz also announced this week that it has brought in a Polish man, PGNiG's technical director Pawel Jozef Stanczak, to be the new president of Ukrtransgaz, the gas transport system scheduled to be unbundled from Naftogaz. At PGNiG in 2003-04, he was in charge of the process of unbundling Gaz-System, which then became Poland’s wholly state-owned gas grid and on whose board until 2008. The appointment may reassure foreign companies -- producers and traders -- active in Ukraine who have said the appointee needed to be able to show his independence from the ministry.


Mark Smedley