Ukraine and energy CommUnity: Still doeS not Fit
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Ukraine and Energy Community: Still Does Not Fit
This study was implemented by NGO “DiXi Group” with financial support of the International
Renaissance Foundation within the project “Monitoring of the Implementation of Ukraine’s
Commitments under the Energy Community after Three Years of Its Membership”.
TABLE OF CONTENTS
General Comments
4
Key Findings
6
DiXi Group is a Ukrainian think-tank carrying out research and consultation on issues of information policy,
energy, security and investment. Its members are working as experts in numerous political and energy Recommendations
8
10
projects in conjunction with government agencies, donor organizations and foreign investors.
DiXi Group activity has several directions, including organization of events and information campaigns,
promotion of transparent and effective governance, and advocacy for European reforms in the energy The Implementation Process
12
sector. “Ukrainian Energy” (www.ua-energy.org) is a unique platform created by DiXi Group.
Gas
24
Dixi Group holds no political opinion; accordingly, any and all views expressed in this publication are
exclusively those of the authors. Electricity
40
For copies of this study and additional information, please contact:
Renewables
P.O. Box 68, 24 Sribnokilska St.,
02095, Kyiv, 52
Environment
60
author@dixigroup.org
Energy Efficiency
Oil
74
76
Statistics
80
Social Issues
Reference to Laws and Regulations
84
©Dixi Group NGO, 2014
Design & Layout by Taras Mosiyenko
Printed by SiLa LLC
On 1 February 2014, Ukraine celebrated the third
anniversary of its membership in the Energy Community.
The Energy Community is the key to en- Having acceded to the Energy Communi- Having become the fully-fledged Energy This study is intended for the wide au-
ergy security in all Europe; its particular ty, Ukraine actually joined the European Community member, Ukraine committed dience comprising government repre-
importance, however, is in it being the only energy market. Membership in the Com- to implement a whole range of European sentatives (first of all, in the part that con-
treaty that links the EU and Ukraine as of munity opens possibilities of introducing directives and regulations which would cerns recommendations on accelerating
today. stronger competition, higher technical harmonise its legislation in the energy the process of acquis implementation in
Jerzy Buzek, MEP, 10.02.2014 standards and regulations and better in- sector with European legal and regula- Ukraine), think tanks and wider audience
vestment climate on the domestic mar- tory framework. Changes should have in Ukraine interested in activity of the
ket. This also entails deeper integration of been introduced in natural gas, electric- current government, specifically in the
the Ukrainian energy sector with markets ity, environment, renewables sectors etc. energy sector.
ЕThe Energy Community is a regional of the EU Member States and strengthen- Assessment of the dynamics of these
union of the South-Eastern European ing of country’s own energy security. An- changes makes the subject of this study.
countries formed to secure social and other advantage of membership in this
economic stability and security of sup- organisation involves additional possi- The study covers the monitoring of
ply among its Contracting Parties. It was bilities for member states to attract inter- Ukraine’s progress throughout 2013,
established in 2006 for a ten-year period national loans and technical assistance. evaluations from previous years can be
term; however, the European Parliament E. g., there are two Ukrainian projects (on found in two other studies by Dixi Group
recommended in 2013 to extend the GTS modernization and on the Brody-Ad- published in 2012 and 2013.
Treaty establishing Energy Community amowo oil pipeline construction) among
after 2016. projects of the Energy Community inter-
est.
The Energy Community requires that the
Contracting Parties harmonise their leg-
islative and regulatory framework with
the EU standards and aims at establish-
ing in the mid-term of integrated energy
markets across the region. The Commu-
nity currently unites the regional market
with 73 million people.
4 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 5
GENERAL
COMMENTS
The monitoring of the Ukraine’s implementation of its commitments before the Energy Community
was carried this year in complex conditions.
It is hard to analyse European standards performance when struggle rages on the streets. Like
any other Ukrainian who wants to see his country a European-type democracy with responsible gov-
No progress: Directives ernment, we had put aside our computers and went to the Maidan. As our work on this study showed
2009/28/ЕС, 2009/119/ЕС, not so much progress as one would expect, we also had to postpone presentation of the study results
to a later date. Nevertheless, we hope this monitoring is well-timed and useful for the new government
2010/31/EU, Third Energy as it will help understand the ‘starting point’ of further reforms in the energy sector.
Package, status
The past year witnessed an unprecedented occlusion of public information from the public. As
of the regulator, in previous years, DiXi Group, pursuant to the Law on Access to Public Information, sent information
social issues inquiries to key ministries and agencies with requests for information about the status of respective
directives’ implementation. With some exceptions (specifically, the NERC, the Ministry of Economic De-
velopment, and the State Agency for Energy Efficiency and Energy Saving), the institutions would only
provide general information. The Ministry of Energy and Coal Industry (which is responsible for the
Being implemented: implementation of commitments in the Energy Community) turned out to be the most closed one as it
took three requests to receive an informative reply.
Directives 79/409/ЕЕС,
85/337/ЕЕС, 1999/32/ЕС, Monitoring and analysis of the legislation and the regulatory framework publicly available on official
websites in 2013 was another method of gathering information for the study. These included orders and
2001/77/ЕЕС, 2001/80/ЕС, resolutions of the Cabinet of Ministers, ministerial orders, resolutions of the National Energy Regulatory
2003/30/ЕС, 2003/54/ЕС, Commission (NERC), and progress reports of institutions on their performance in 2012 and 2013. It is
worth noting that the practice of refraining from publication of important documents, whether
2003/55/ЕС, 2004/67/ЕС, in draft form or already adopted, persists in Ukraine. The information on adoption in July 2013 of
an updated version of the Energy Strategy of Ukraine by 2030 was withheld for six months. Despite the
2005/89/ЕС, 2006/32/ЕС, Ministry of Energy order to transfer the authority of the GTS operator ’s to Ukrtransgaz was released in
2008/92/ЕС, 2010/30/EU, December 2013, the absence of information on the document registration by the Ministry of Justice
made its enforcement impossible.
Regulation 1228/2003,
Security of Supply Given the lack of a single source of integrated information on the acquis implementation status and the
fact that ministries and institutions would often provide incomplete information and some documents
Statement might be inaccessible, DiXi Group is unable to affirm the list of documents mentioned in the study to
be an exhaustive one; at the same time, the list represents the most complete collection of deci-
sions made by the government authorities in respect of the commitments made by Ukraine in
the Energy Community.
Close to DiXi Group experts also assessed key developments and decisions in the energy sector of Ukraine dur-
ing the previous year in terms of their compliance with European norms and principles.
implementation:
Regulations
1715/2005,
1099/2008
6 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 7
gas pipeline construction executed with transit of implementation of the Third Energy Package
countries3. The Slovak party also agreed to enter which is mandatory. There is no decision on a spe-
into agreement on reverse flows to Ukraine4. An cific schedule of implementation of either the LCP
ongoing political dialogue and clearly formulated Directive or the Directive on Oil Stocks. It is neces-
requests from the Ukrainian side can alter internal sary to decide on these issues as soon as possible
KEY political situation in the EU and reach mutually
beneficial results.
as they matter for setting up priorities in the na-
tional economy and should be taken into account
FINDINGS
while adopting legislation and regulatory acts.
The Ukrainian party kept procrastinating with
performing its commitments. Despite a more Some directives are already implemented with
dynamic, compared with 2012, process of adopt- violations. The Law on the Principles of Electricity
ing the necessary legal and regulatory frame- Market Operation adopted last October, despite
work, the Ukrainian government showed no generally necessary for the country, did contain
‘breakthrough’ in practical reforms implementa- a range of provisions which deviated from Euro-
tion. The energy companies do not disclose infor- pean principles and standards: specifically, it pre-
mation about free network or storage capacities served cross-subsidising. Comments expressed
although it is required by the NERC resolution on by the World Bank and the Energy Community
access to GTS. The Law on Alternative Fuels, in the were not fully taken into account. The draft law on
part on 5% bioethanol share in mixed petrols, is state regulation in the energy sector, which is un-
still inoperative in spite of no action to postpone der consideration in the Parliament, in its current
implementation of the requirements approved. version, actually makes the regulatory authority
There is no proper monitoring and control of short of those powers that the EU requires. This
quality of reforming at the implementation phase. leads to a situation when the Energy Commu-
nity may be used for manipulations, and already
One of the key reasons behind such procrasti- adopted documents should be sent for a second
nation is weak communication both inside the round of revision.
government and between the branches of gov-
ernment. The National Renewable Energy Action
Plan and the National Energy Efficiency Action
Plan, which have been developed by the State
Ukraine’s membership in the Energy Commu- bers and the EU Member States (in particular, Agency for Energy Efficiency and Energy Saving
nity was in jeopardy in 2013. Parallel to imple- by Bulgaria, Serbia, Hungary, Greece, Slovenia, of Ukraine and then submitted for consideration
mentation by the Ukrainian government of the Croatia and Austria) of the South Stream gas pipe- of the government, have not been approved by
commitments in the Energy Community, a number line construction agreements with Russia, which the latter since October 2013. The Parliament has
of politicians expressed their disgruntlement with were a direct threat to interests of Ukraine, be- yet to approve draft laws important for European
Ukraine’s membership in it. Statements to this ef- came V.Yanukovych’s reasoning about viability integration– on energy efficiency principles and
fect could be heard at various official levels from of Ukraine leaving the Community. The Deputy on state regulation in the energy sector, – and
the Deputy Prime Minister Y.Boyko1 in April 2013 to Prime Minister Y.Boyko explained his criticism of the draft law on energy performance of buildings
President V.Yanukovych2 in November 2013. These the Ukraine’s membership in the Community failed to pass the second hearing. A closer com-
‘fluctuations’ precluded the country from dynami- with impossibility of achieving reverse gas sup- munication between all the stakeholders already
cally moving ahead with its reforms and creating a plies from the EU to Ukraine if too high gas prices at the stage of developing legislation and regula-
stable investment climate. would be imposed by Russia. The rules that had tion may substantially facilitate the whole process
The Russian factor became the key ‘stumbling been long-working in the EU were put on hold of its subsequent adoption and implementation.
rock’ between Ukraine and the Energy Com- whenever Ukraine asked for their application.
munity. The signing by the Community mem- The government postpones strategic decisions
At the same time, by late 2013 the EU did com- for a long time. Ukraine is yet to decide terms
1
oyko, Ukraine Did Not Receive Proper Support from European
B ply with all obligations which the Ukrainian
Energy Community, Ukrinform, 29.04.2013. – http://www.ukrinform. EU Threatens to Cut Russia’s South Stream, BBC Ukraine, 07.12.2013.
3
ua/ukr/news/ukraiina_ne_otrimala_nalegnoii_pidtrimki_vid_e_ party requested. In December 2013, the Minis- – http://www.bbc.co.uk/ukrainian/business/2013/12/131206_south_
vropeyskogo_energetichnogo_spivtovaristva___boyko_1822868 try of Energy of Russia received an official letter stream_eu_russia_ag.shtml
2
anukovych Mulls Ukraine’s Exit from Energy Community,
Y from the European Commission on the necessity 4
Slovak Republic Agrees to Reverse Gas Supply Ukraine, Espreso
Ekonomichna Pravda, 27.11.2013. – http://www.epravda.com.ua/ TV, 04.03.2014. – http://tvi.ua/new/2014/03/04/slovachchyna_
news/2013/11/27/405519/ of renegotiating agreements on the South Stream pohodylasya_na_revers_hazu_v_ukrayinu
8 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 9
RECOMMENDATIONS
DiXi Group emphasises the need for a more Implementation of the European legislation tively approved by the Energy Community Sec- ural monopolies (natural gas, electricity, heat-
efficient communication between all the needs to be carried out with more proactive retariat, so needs to be enacted. These are the ing). Without doubt, decisions on their increase
stakeholders for the purpose of the acquis involvement of the Energy Community ex- ‘debts’ inherited in 2014 from previous years; should also be made following proper analysis
implementation. Ministries and agencies perts. In February 2014, Ukraine and the Energy they must be satisfied in the nearest time. and an ‘audit’ of the current tariff components.
should viably develop and publish both plans Community signed the Memorandum of Under- In line with the European legislation require-
for legal and regulatory acts development and standing that has now to translate into specific The government has to make key decisions ments, it would be necessary to review the lo-
reports on their adoption, which is currently dialogue mechanisms. As Ukraine presides in the to identify the strategy of energy sector cal content requirement as a precondition for
done on a rather selective basis. There should be Community this year, it makes a good opportuni- development. This concerns, first of all, terms receiving the feed-in tariff (it stands at 50% this
a single coordinator capable of setting up quick ty for Ukraine to propose new bright initiatives to and conditions of adoption of the Third En- year). The NERC should have the possibility to
communication with government institutions. the Community members and to represent itself ergy Package, clarity with plans on the NJSC implement the already developed mechanism
In order to prevent manipulations or ‘masking’ as an example of how the new cooperation tools “Naftogaz of Ukraine” reform, and terms and of incentive-based pricing that could be al-
of the documents, they have to be subject to may yield high-quality results. conditions of implementing the LCP Directive ready used by nearly a dozen of Ukrainian en-
public assessment and expert evaluation. There and the Directive on Oil Stocks. These are the ergy companies.
should be a single information resource to pro- The action plan on implementation of the EU decisions expected by both the public and the
vide everyone with an opportunity to indepen- legislation needs to be updated and improved. business community to lay long-term plans of
dently assess the progress of European reforms In order to ‘compare notes’ and avoid potential cooperation with Ukraine.
implementation in the energy sector. Working misunderstandings with the Energy Community
groups that are being currently created in the on the timeframe of acquis implementation, the Together with adoption of legislation,
government and the parliament should avoid Cabinet of Ministers should publish a new Order timeframes for related regulation devel-
parallel activities and duplication. with new deadlines for each of the EU directives. opment should be envisioned. It is neces-
It would be also worth to develop schedules for sary to prevent a situation when the adopted
For that purpose, a multi-stakeholder working implementation of each of the acquis and agree legislation is impossible to implement for the
group should be established to unite responsible these with the Energy Community Secretariat as lack of timely drafted regulations (the way it
agencies, interested civil society organizations well as to identify so-called ‘milestones’, interim happened with the Law on Alternative Fuels).
and businesses. Such group could assist in prepar- targets and performance criteria, for each imple- For this purpose, the practice of developing
ing and implementing reforms in the energy sec- mentation phase. schedules for secondary law already at the
tor in accordance with the EU requirements. The stage of the primary law adoption should be
mechanism of considering legal and regulatory The parliament and the government need to made permanent.
acts at the initial stage will substantially defuse adopt the already planned legislative acts re-
tensions and mistrust of market players and im- quired by the Energy Community. Specifically, The government needs to cancel ‘hand-
prove quality of such acts; public involvement in legislation to regulate particular features of elec- made’ decisions in the energy sector and
the process of drafting these acts will raise public tricity debts payment and to improve the mecha- refrain from such practices in the future. The
awareness and level of reform acceptance. Con- nism of power supply reserve funding had to be Cabinet of Ministers has to repeal the Memo-
sequently, the whole process of sectoral reforms developed and adopted under the Ministry of En- randum signed with ferroalloy plants which
will become more professional and consensual ergy and Coal Industry’s Action Plan for 2013; fur- allows them to pay for electricity at reduced
among all the parties concerned. thermore, the National Energy Efficiency Action tariffs. It is also necessary to cancel the morato-
Plan has been already developed and even posi- rium on the increase of prices and tariffs of nat-
10 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 11
2013 THE
IMPLEMENTATION
loading 25 March –
the Draft Law on
Amendments
to Certain Laws
of Ukraine on
PROCESS
30 August –
draft laws No. 3145
19 July – and 3146 to specify the
Implementation
the Ministry of timeframe of bioethanol
of Provisions of
Environment 26 July – adding and to repeal the
the Convention on
14 March – compelled by the the Memorandum of Law on Production and
12 February – Environmental Impact
the Procedure court to execute Understanding signed Use of Petrols Containing
the Methodology of Assessment in a Trans-
17 January – for Feed-In Tariff 26 June – the National Plan between Ukraine and Biological Components
Calculation of Payments boundary Context
the Rules of Electrical Setting, Review and a concept of energy of Kyoto Protocol INOGATE to approve registered
for Electrical Plants submitted
Plants Connection to Termination amended hub establishment Implementation the Energy Statistics
Electrical Networks Connection to Electrical by the NERC 24 July – Action Plan
19 June – commissioned by the
approved by the NERC Networks approved by the 24 July – the Procedure for 28 August –
the Action Plan for Cabinet of Ministers
NERC an updated version Issuing, Usage and the list of 11 September –
Directive 2001/77/
of the Energy Termination of environmentally the Draft Law No 3230 to
ЕС and Directive 27 June –
15 February – 21 March – Strategy of Ukraine the Guarantee of 16 August – extra-hazardous specify economic agents
2003/30/ЕС the Procedure
11 February – the agreement on the the Draft Law on by 2030 approved Electricity Origin from the Draft Law No. 3095 activities and on which the norm on
Implementation of local content
the Draft Law No. 2273 reform programme Biological Fuels by Cabinet of Alternative Sources on State Regulation facilities approved by mandatory bioethanol
approved by the determination
on Labelling of Biofuel development signed Manufacturing and Ministers Resolution approved by the in the Energy Sector Cabinet of Ministers addition to petrols applies
Cabinet Order No. approved by the
and Mixed Petrols between Naftogaz and Consumption rejected No. 1071 Cabinet of Ministers registered Resolution No. 808 registered
429-r NERC
registered Ernst&Young
20 September – 9 October – 23 October – 24 October – 24 October – 7 November – 28-29 November – 18 December – 20 December – 30 December
the Methodology to the Acquis the list of Ukraine’s the decision on the decision on draft National the Association Memorandum of the State Agency for – the Cabinet of
Identify Available or Implementation Report commitments flexible instruments the observer status Renewable Energy Agreement between the Cooperation between Energy Efficiency Ministers resolution
Non-Available Transfer for 2013 published by updated by the for Directive of Ukrtransgaz Action Plan by 2020 EU and Ukraine not signed the government and and Energy ‘recommends’
Capacity of the United the Energy Community Cabinet of Ministers 2001/80/ЕС and made by the presented at the Eastern Partnership ferroalloy plants in Saving’s scope of reducing maximum
Gas Transportation Secretariat Order No. 833-r “On implementation of European Network Summit in Vilnius, contrary respect of electricity authority reduced gas prices for
System of Ukraine Amendments to some requirements of Transmission 8 November – to the expectations tariffs reduction by Decree of the state-financed
approved by the 10 October – the Action Plan on of Directive 2010/75/ System Operators draft National Energy extended by the President of Ukraine organisations,
Ministry of Energy and the Draft Law on Implementation of ЕС approved by the for Gas, ENTSOG Efficiency Action Plan 2 December – Cabinet of Ministers No. 699/2013 industry and
Coal Industry Order Energy Performance of Commitments under Ministerial Council by 2020 presented Ukrtransgaz assigned heating companies.
No. 682 Residential and Public the Treaty establishing of the Energy 7 November – functions of the United 19 December –
Buildings rejected by Energy Community” Community the Procedure of 21 November – Gas Transportation System implementation of
the Verkhovna Rada Holding Auctions the Procedure for of Ukraine operator the incentive-based
24 October – 24 October – on Access to Funding Services pricing in Ukraine
15 October – the Law on the modernisation Transmission on Electrical Plants effectively frozen by
hearings on the Principles of Electricity of the Urengoy- Capacities of Connection to the NERC
progress of Ukraine’s Market Operation in romary-Uzhgorod International Power Electrical Grids
commitments held in Ukraine adopted gas pipeline and Grids of Ukraine approved by the NERC
44% 2014
the Verkhovna Rada construction of the for Electricity
Committee for Fuel Brody-Adamowo oil Transportation
and Energy Complex, pipeline included Purposes amended
Nuclear Policy and to the projects of by the NERC
Nuclear Safety Energy Community
interest.
12 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 13
DIRECTIVE 2003/55/EC
DIRECTIVE 2003/55/EC CONCERNING COMMON RULES FOR THE INTERNAL MARKET
IN NATURAL GAS
The Directive specifies the key principles of market liberalization:
• Independent Regulator. As the regulators are responsible for upholding the principles of non-
discrimination, transparency and competition in the gas market, estimation and setting of the tariff
and are authorized to settle disputes, their proceedings shall be independent of the market partici-
pants and the government authorities.
• Equal Access. The Directive specifies the right of non-discriminatory access of third parties to gas
transportation and distribution systems and LNG terminals on transparent commercial terms and
under control of the regulator. Therefore, consumers are free to select their suppliers, wherever the
gas is produced. Access to gas storage capacities is governed by the special terms, which guaran-
tee access on a contractual basis or the relevant legislative regulation.
• Independence of System Operators. The operator companies of gas transmission, storage, and
sale systems and LNG terminals are responsible for management, maintenance and development
of such systems. They shall undertake to guarantee safety, reliability, efficiency and interconnec-
tion of the capacities and non-discriminatory access for all users.
• Split of Vertically Integrated Companies. In order to avoid any discrimination and enable free
access, transportation and distribution operations of such companies shall be legally and function-
ally separated from other business areas (production and supply). The said separation shall also
apply to the decision making and accounting procedures save for ownership rights.
• Protection of Consumers. The Directive specifies the common list of standards of ensuring high
level protection of consumers, in particular, the right to change the supplier, transparent contrac-
tual terms, general information, methods for resolution of disputes or the like and shall set the
proper level of protection for very vulnerable consumers (e.g., in order to avoid cut-off ).
• Information Exchange. The system operators shall undertake to furnish other operators informa-
tion required for safe and efficient functioning of the related transportation/sale systems.
GAS
Рік в Енергетичному
14 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 15
According to the Protocol on the Accession of The scope of authority of Naftogaz has been (UGSF) and granted it ‘the right to withdraw such terprises on the basis of which joint-stock com-
Ukraine to the Treaty establishing Energy Com- limited with a view of company’s repeated gas from UGSF for subsequent distribution to con- panies were to be established.12 According to
munity, the Directive had to be implemented by 1 abuse of its dominant position on the market. sumers throughout the heating period’6. Still, the the sovereign bond issue prospectus prepared
January 2012 and the market will have been fully According to government’s best-case scenario respective document was not officially published by the Ministry of Finance, Ukraine should have
liberalised starting from 1 January 2015. estimates, the adopted legislation allows for the or registered in the Ministry of Justice7, and, fol- finished Naftogaz restructuring by the end of
carrying out of gas market transactions in accord- lowing numerous protests from private extracting 201413. However, little was done for that in prac-
The regulatory framework for gas market enti- ance with competition principles, provides for companies, was ultimately rejected8. tical terms: It was only in late 2013 when the
ties operation on European terms has already free access to the gas transportation system and Ministry of Energy and Coal Industry accepted
been developed. The reforms started with adop- eliminates Naftogaz’s monopoly in gas imports Still, no noticeable progress has been reached orders that related to individual structures; spe-
tion in 2010 of the Law on Principles of Natural and exports3. In particular, the Cabinet of Minis- on issues of legal and functional unbundling cifically, the SE “Budivelnyk” was reorganized via
Gas Market Operation that considerably approxi- ters Resolution of 24 July 2013, No. 510, lays Naf- of Naftogaz operations. The Ministry of Energy affiliation with SE “Naftogazobslugovuvannya”,
mated Ukraine to the core principles of Directive togaz as a guaranteed supplier under obligation and Coal Industry Order No. 205, of 23.04.2013, re- and SE “Naftogazbezpeka” was wound up. The
2003/55/ЕС.1 Among the documents worth not- of getting the license on gas supply under regu- flected expectations of NJSC reform programme working group established by Ministry of Energy
ing are Cabinet of Ministers Resolution of 25 July lated tariff. The mentioned positions are shared approved and started before 10 October; how- and Coal Industry Order of 07.09.2012, No. 690,
2012, No. 705, on the Procedure for Establishing by the Energy Community that outlined demo- ever, the Cabinet failed to comply with respective adopted a series of decisions on property aliena-
Guaranteed Natural Gas Suppliers (which remains nopolisation of imports in its Acquis Implementa- reform programme provisions by the year-end so tion (vehicles, furniture, computing equipment,
the target for criticism for its territory-based prin- tion Report for 2013. the performance deadlines had to be moved to office equipment etc.)
ciple of supplier operation2) and the NERC Resolu- 2014.
tion of 29 March 2012, No. 305, on Determination The Order of the Ministry of Energy and Coal As the Eight EU-Ukraine Joint Report on Execu-
of Qualification Levels of Natural Gas Consumers. Industry of 2 December 2013, No. 882, that as- On 15 February 2013, Naftogaz entered into tion of the Memorandum on Cooperation in the
signs functional responsibilities of the United agreement on reform programme development Energy Sector mentions, the Ministry of Energy
The regulatory authority remains the body of Gas Transportation System of Ukraine operator with Ernst&Young9. The Ministry of Energy and and Coal Industry, to continue cooperation with
key importance for new gas market develop- to Ukrtransgaz, is also of importance. Naftogaz Coal Industry planned to receive preliminary Ernst&Young, issued an Order of 13 June 2013,
ment. E.g., in pursuance of the Law on Amend- was known for its frequent abuse of the status: proposals by late April 201310, though the future No. 368 to establish a Working Group on Naftogaz
ments to Certain Laws of Ukraine in respect of e.g., Sumygaz fell victim of an untimely ap- of these is yet to be known. A report fragment11 restructuring that involved representatives of the
Payment for the Connection to Networks of Natu- proved gas distribution volumes (the so-called suggests: 1) full disposal of state equity interest Ministry, Naftogaz, three international financial in-
ral Monopoly Entities, the NERC developed and ‘limits’) when in March 2013 it had to supply in Ukrnafta; 2) partial sale of the minority share stitutions (EIB, EBRD and the World Bank) and the
adopted seven its resolutions on gas supplying gas to industrial consumers under the regu- in Ukrtransgaz; 3) pooling of extraction interests EU Delegation.
entities connection to networks whereby ‘stand- lated tariff.4 Abuse practice of another kind was (Ukrgazvydobuvannya, Chornomornaftogaz) and
ard’ and ‘non-standard’ connection models have related to the usage by extracting companies sales of a fractional share (via IPO) following the At the same time, the range of controversial
been established and duration of, and payment of the gas they had pumped into underground completion of restructuring process. According steps taken by both the current Cabinet and
for, such services identified. storage facilities.5 to the consultants, the above steps will maximize its predecessor witness the lack of a strategic
financial receipts of Naftogaz and reduce compa- vision of Naftogaz reforms. In April 2013, the
First steps have been made to introduce incentive- The Cabinet of Ministers Resolution of 19 June ny’s shortage of funds. Cabinet of Ministers motioned to the Verkhovna
based regulatory treatment in the gas distribution 2013 made another controversial story; the act Rada a draft law No. 2937 that envisaged a pos-
segment; specifically, two resolutions on tariff- commissioned Naftogaz with pumping at least On 25 January 2013, the President V.Yanukovych sibility for the government to make decisions on
setting procedure and regulatory framework de- 50% gas extracted by private companies in announced Naftogaz separation into several en- Naftogaz and gas transportation system privatisa-
termination have been adopted by the NERC. To Ukraine into underground gas storage facilities 6
abinet Commissions NaftoGaz with Injecting 50% Privately Produced
C tion. The Explanatory Note mentioned the Energy
this very end, the State Property Fund approved Gas, Ekonomichna Pravda, 20.06.2013. – http://www.epravda.com.ua/ Community requirements, and the then Energy
news/2013/06/20/381348/
on 28 August 2013 changes to the Methodology 3
T ranscript of Committee hearings on the topic of Status of Execution Minister E.Stavytskyi announced the aim of liberal
of Commitments Ukraine Has Undertaken for Under the Protocol of
7
Ibid.
of Evaluation of Assets of Natural Monopoly Enti- 8
abinet Cancels Requirement on Mandatory 50% Private Gaz Injection
C gas market establishment.14 Meanwhile, the cur-
Accession of Ukraine to the Energy Community Ratified by the Law
ties, Economic Agents on Adjacent Markets in the of Ukraine of 15 December 2010, No. 2787-VI. Verkhovna Rada of in UGSF, The Ukrainian Energy Sector, 13.11.2013. – http://ua-energy. rent minister Y.Prodan stated privatisation was
Ukraine’s Committee on Fuel and Energy Complex, Nuclear Policy and org/post/38842
Field of Heat and Power Cogeneration.
Nuclear Safety, 30.10.2013 – http://kompek.rada.gov.ua/kompek/con- 9
Ernst & Young Will Undertake for NaftoGaz Reform, Ekonom- 12
anukovych Made Up His Mind to Separate NaftoGaz, VKurse,
Y
1
F or detailed assessment please refer to DiXi Group publications: Gas trol/uk/publish/article?art_id=47328&cat_id=47139 ichna Pravda, 25.02.2013. – http://www.epravda.com.ua/rus/ 25.01.2013. – http://vkurse.ua/ua/business/nadumal-razdelit-nafto-
Market Law in Ukraine: Does it Comply with European Rules? (http:// 4
. Pryadko, How They Trade in Gas in Ukraine, Dzerkalo Tyzhnia,
V news/2013/02/25/363050/ gaz.html
ua-energy.org/post/1662); and also the executive summary on status Ukraine, 6.03.2013. – http://gazeta.dt.ua/energy_market/yak-v-ukray- 10
kraine Plans to Complete NaftoGaz Reform, YkrNews, 26.04.2013. –
U 13
Government Plans to Reform NaftoGaz by the End of 2014, Eko-
of the law implementation (http://ua-energy.org/post/25120). ini-gazom-torguyut-_.html http://ykrnews.com/yekonomika/ukra-na-rlanu-zavershiti-reformu- nomichna Pravda, 26.04.2013. – http://www.epravda.com.ua/
2
013 Annual Report on the Implementation of the Acquis under the
2 5
T itenko, 12 Companies Address NERC December 2012 to Notify Is- vannja-naftogazu.html news/2013/04/26/373075/
Treaty Establishing the Energy Community, 9.10.2013 // Energy Com- sues with Extracted Fuel Withdrawal, RBK Ukraine, 4.03.2013. – http:// 11
E rnst&Young and Rothschild Group Submit NaftoGaz Reform Propos- 14
. Zanuda, Government Wants the Right to Privatise NaftoGaz for
А
munity, 19.02.2014. – http://www.energy-community.org/pls/portal/ www.rbc.ua/ukr/newsline/show/v-nkre-v-dekabre-2012-g-obratilis- als to Government, The Ukrainian Energy Sector, 14.02.2014. – http:// Itself, Ukrainska Pravda, 13.05.2013. – http://www.pravda.com.ua/
docs/2304177.PDF 12-kompaniy-soobshchivshie-04032013085700 ua-energy.org/post/41440 inozmi/bbc/2013/05/13/6989727/view_print/
16 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 17
not in the agenda of negotiations with the En- try and the State Property Fund of 9 November decision was made on the backdrop of a deep Conclusion
ergy Community.15 As of February 2014, the draft 2012, No. 882/3812. As of early 2013, respective political crisis and hence, can be deemed a
was still under consideration and no hearings on contracts were executed with the majority of populist one. While the framework legislation on gas market is
it were held. oblgases. Simultaneously with that, preparations practically ready in Ukraine, the market itself re-
for incentive-based regulation implementation mains segmented both from the supply and the
In December 2013, the Ministry of Energy and are being carried out (see above). demand sides. Regular procrastinations with verti-
Coal Industry published its Order No. 936 on cally integrated companies’ unbundling combined
measures for Naftogaz financial discipline en- Chaotic tariff policy dictated by populist con- with continued existence of ‘micromanagement’
hancement which called on Naftogaz to pre- siderations harmed not just the gas market but practices limit competition. Government initiatives
agree any financial and economic transactions in the economy in general. According to estimates offer no strategic determination of a sectoral devel-
excess of 8 mln. UAH with the Ministry. in the Energy Community’s Acquis Implementa- opment model as yet.
tion Report for 2013, low-level tariffs adversely af-
A draft law No. 2437 on the Procedure of Natu- fects financial viability of Naftogaz and it subsidi-
ral Gas Supply to Residents of Ukraine was also ary companies: specifically, the companies’ deficit
registered last year. The document suggested the made 1.5% GDP in 2011 and amounted up to 2%,
establishing of a national gas supplier that would in 2012.
be authorised to buy up gas ‘at fair prices’ from
private extracting business to meet demands of Still, the actions of the government that actually
the citizens. In early 2014, the Ministry of Finance ‘micromanaged’ the regulatory authority looked
proposed to develop and adopt a draft Cabinet far from logical. On 26 June 2013, the NERC in-
resolution to restore Naftogaz in its status of sin- creased Ukrtransgaz gas transmission tariffs17 and
gle gas supplier.16 The new cabinet was of idea it (for the first time since June 2006) introduced a
would increase corporate revenues from gas sales 4.4 time increase of tariffs for gas injection into,
to consumers (first of all, industrial ones) and trim and withdrawal from, UGSF.18 Nevertheless, the
budget expenditures on corporate deficiency tariff rates were returned to their previous levels
payments. already in September.19 Such manipulations hap-
pened without properly informing market partici-
Lack of certainty around big market players pants.
puts on hold processes of gas transportation
and distribution enterprises (oblgases). The Moreover, the Cabinet of Ministers in its Resolu-
regulatory authority in its letter of 4 December tion of 30 December 2013, No. 951, on Reduc-
2013, No. 8721/16/47-13, notified regional gas ing the Prices for Natural Gas, ‘advised’ the NERC
distribution companies of the need for strict new marginal prices for state-funded organisa-
compliance with legislative requirements at tions, industrial consumers and municipal heat
natural gas distribution and supply functions and power enterprises, and granted Naftogaz
unbundling. However, as of February 2014, the the right of correcting marginal prices in the
outcomes of NERC’s monitoring were yet to be event of weighted average price for imported
published. gas change. The changes were due to agree-
ments between Naftogaz and Gazprom that en-
According to the National Reform Action Plan visioned a considerable reduction of imported
for 2013, oblgases were to receive by 25 March gas price.20 It is worth noting though that the
gas distribution networks for their use pursu-
17
kraine Imposes Fourfold Increase of Gas Transmission Tariff, LIGABi-
U
ant to terms and conditions approved by Joint znesInfom, 27.06.2013. – http://biz.liga.net/all/tek/novosti/2531830-
Order of the Ministry of Energy and Coal Indus- ukraina-v-4-raza-rovysila-tarif-na-transportirovku-gaza.htm
18
ERC Orders Manyfold Increase of Tariffs on Gas Injection and With-
N
15
Ex Minister: GTS Privatisation, a Cabinet’s Choice, Ekonom- drawal from USGF, The Ukrainian Energy Sector, 26.06.2013. – http://
ichna Pravda, 29.05.2013. – http://www.epravda.com.ua/ ua-energy.org/post/33694
news/2013/05/29/377292/ 19
krtransgaz Tariffs on Gas Injection and Withdrawal from USGF Re-
U
16
‘
Shock Therapy’ from Yatseniuk’s Cabinet, Ekonomichna stored to 2006 Level, The Ukrainian Energy Sector, 5.09.2013. – http:// Natural Gas for Consumers in Ukraine, Ministry of Energy and Coal
Pravda, 11.03.2014. – http://www.epravda.com.ua/publica- ua-energy.org/post/35872 Industry, 26.12.2013. – http://mpe.kmu.gov.ua/minugol/control/uk/
tions/2014/03/11/426491/ 20
Draft Cabinet of Ministers of Ukraine Resolution to Reduce Prices for publish/article?art_id=244905931&cat_id=35082
18 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 19REGULATION 1775/2005
According to the Protocol, the Regulation was to the lack of clearly defined principles of pipeline
be implemented before 1 January 2012. transmission capacity distribution, overload man-
REGULATION 1775/2005 ON CONDITIONS FOR ACCESS TO THE NATURAL GAS TRANS- agement and rules of trade on the secondary
MISSION NETWORKS On 19 April 2012, NERC adopted its Resolu- market. Ukrtransgaz operations ultimately remain
tion No. 420 to Approve the Procedure of Ac- non-transparent given the lack of freely accessible
The Regulation sets forth more detailed rules of access to natural gas transmission networks — the tar- cess to the United Gas Transportation System of information about free capacities and absence of
iff principles, third party access services, transparency requirements, rules of balancing and imbalance Ukraine (UGTSU) that generally complied with an electronic platform for such capacities reserva-
charges, principles of throughput capacity allotment and congestion management (including, but not EU legislative requirements.1 NERC Resolution tion for various terms.
limited to secondary market of capacity trading). The mentioned document was included in the list of of 31.01.2013, No. 75, approved changes to the
binding acquis communautaire within the framework of the Energy Community by the Decision of the
Procedure that accounted for proposals by the The situation can be changed by changing the
Ministerial Council 2007/06/MC-EnC dd. 18 December 2007.
Energy Community Secretariat as well as for rec- company status. In addition to receiving the
ommendations of the Cabinet of Ministers and UGTSU operator status (see above), on 24 Octo-
• Transparent Market Tariff. The tariff or methods underlying their setting, shall be used by the
the Coordination Centre for Economic Reforms ber 2013 Ukrtransgaz became an observer at the
transportation system operators on a non-discriminatory basis, shall be approved by the regula-
Implementation under the President of Ukraine: European Network of Transmission System Opera-
tors, shall be transparent and include actually incurred costs. The tariffs and access to networks
e. g., the requirement on binding preliminary in- tors for Gas (ENTSOG). The steps will allow the com-
shall provide incentives for efficient trading (including, but not limited to cross-border trading) and
clusion into the list of UGTSU agents and facilities pany implementing standardised EU procedures
competition and shall not limit the market liquidity.
was scrapped. and improving cooperation with other operators.
• Free Access to Third Party Networks. The transportation system operators shall ensure that the Liberalisation of exports may become another step
access services are provided on a non-discriminatory basis to all users (including, but not limited to Further changes to the document, specifically as forward; a draft law to abolish export tax on energy
a third party) under equivalent contractual terms. Access can be granted against guarantees from regards a clearer delimitation of external and in- product supplies to Energy Community member
network users in relation to their creditworthiness, but they shall not pose any inadequate barriers ternal supply, were approved by NERC Resolution states was passed in a first reading in early Novem-
and shall be proportionate. of 26.12.2013, No. 1722. The regulatory authority ber 2013.
also regulated some key aspects related to UGT-
• Fair Capacity Allocation. The maximum capacity at any required points shall be available for mar- SU components at gas supply and distribution;
ket participants provided that the system is kept integral and efficient. Consumers shall be entitled specifically, it approved standard contracts on Conclusion
to resell or let on lease their unused capacity in the secondary market. Non-discriminatory, trans- economic management, usage and operation of
parent capacity management mechanisms shall be provided in the event of contractual or physical network facilities. With a view of numerous changes to the Procedure
congestion. of Access to the UGTSU, the document can be said as
It was envisaged in 2013 to approve a technique progressively assuming the form of a partially exe-
• Transparency. The transportation system operators shall undertake to publish: detailed informa- to determine (un)availability of free transmission cuted one. In the same time, the work on enhancing
tion on the services and relevant terms of their provision as required for the network users to have capacity at the UGTSU. The Ministry of Energy the independent status of Ukrtransgaz as a system
the access; sufficiently detailed information on tariffs, methods for their charging and structure; and Coal Industry addressed the EU Delegation operator allows an optimistic view of its implemen-
information on technical, contracted and idle capacity at all relevant points (In particular, entry and requesting consultations, and the draft regulation tation.
exit points) on an ongoing basis. The data shall be made available in standardized and convenient was placed on its web site already in July 2013.
form. The technique was finally approved by Order
No. 682 of 20.09.2013.
• Stabilization of Operation. The rules of balancing shall be based on actual transportation system
requirements. If an imbalance charge is set, it shall be based on the pricing situation and provide While the Ministry of Energy and Coal Industry
incentives for network users to balance offtake and supply of gas. Such charges, which shall be deems the terms and conditions of accession to
proportionate, shall prevent cross-subsidies between customers and shall not prevent new play- the UGTSU transparent ones2, the Energy Com-
ers from entering the market. To this end, the transportation system operators shall undertake to munity Acquis Implementation Report for 2013
provide timely and reliable information online on the user balancing status. does highlight shortcomings like non-regulated
access to process gas, ancillary services and up-
stream networks and criticises the document for
1
F or detailed assessment of document’s compliance with Regulation
1775/2005 norms please refer to DiXi Group’s Executive Summary on
the Procedure of Access to the GTS of Ukraine, The Ukrainian Energy
Sector, 12.07.2012. – http://ua-energy.org/post/22179
2
inistry of Energy and Coal Industry Order No. 277, of 16.05.2013,
M
on Results of Ministry of Energy and Coal Industry Board Session of
25 April 2013, LIGA ZAKON, 19.02.2014 – http://search.ligazakon.
ua/l_doc2.nsf/link1/FIN89888.html
20 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 21DIRECTIVE 2004/67/EC
According to the Protocol, the Directive should the EIB3. At the same time, the Ukrainian GTS as-
have been implemented before 1 January 2012. set base valuation figures calculated by Baker
DIRECTIVE 2004/67/EC CONCERNING MEASURES TO SAFEGUARD SECURITY OF NAT- Tilly Ukraine in 2012 were not mentioned.4 The
URAL GAS SUPPLY According to the Action Plan on Implementation modernising effort is actually carried out from
of Commitments under the Treaty establishing the budget of the Ukrtransgaz for which reason it
The Directive was also included in the list of binding acquis communautaire within the framework of Energy Community, the NERC, the Ministry of En- may not be either massive or perceivable, though
the Energy Community by the Ministerial Council Decision 2007/06/MC-EnC dd. 18 December 2007. ergy and Coal Industry, and Naftogaz had to de- remain in the focus of attention of investors. In
The document sets forth the measures for provision of the proper level of security of supply, with a par- vise measures for assuring security of natural gas May 2013, a high-level roundtable discussion was
ticular emphasis on the Community mechanism. The directive requires that common, transparent and supplies. At the same time, the response of the organised in Brussels; it resulted in the establish-
non-discriminatory policy be determined for security of supply compatible with the competitive mar- Coordination Centre for Economic Reforms Im- ment of a consulting committee which will prepare
ket requirements and that the roles and duties of the market participants to carry out the required pro- plementation to the DiXi Group inquiry makes it recommendations for the EU Commissioner for En-
cedures be specified. clear the government has no intentions to practi- ergy and the Ministry of Energy and Coal Industry.
cally implement the mentioned measures. Besides that, it might be worth noting the place of
• Domestic Security Standards. The nation shall specify roles and duties of various gas market par-
the Ukrainian GTS in the list of projects of the EU in-
ticipants and set the minimum security standards of gas supply, which market players shall comply
Specifically, the Ministry of Energy and Coal In- terest and the relevant Energy Community projects
with. The said standards shall be published and implemented in non-discriminatory and transpar-
dustry has notified the Cabinet of Ministers of (PECIs)5, which increases chances of receiving re-
ent manner.
impracticability of changes to the gas market act spective funding facilities.
as it deems the gas supply security provisions suf-
• Two-level Response System. At the first level, the country shall draft and update as needed an
ficiently factored in the body of law. The Ministry The Energy Community Secretariat notes the
emergency action plan at the national level. The Directive contains the minimum list of gas supply
notified its position to the Energy Community broadening of agreements on reverse gas sup-
security instruments, including, but not limited to the use of storage facilities, connecting pipe-
Secretariat via the Ministry of Foreign Affairs as ply from the EU in 2013. In addition to imports
lines, market mechanisms or the like. If the measures taken at the national level are insufficient in
early as in 2012. It is pointed out that the legal from Poland under contracts with RWE Supply
order to overcome the consequences of a supply disruption, assistance shall be given by the Euro-
regulations currently in force determine the gas and Trading GmbH, Germany, that started in No-
pean Commission, which can provide recommendations in relation to further measures or present
supply reliability monitoring system as well as vember 2012, on 28 March 2013 gas imports also
their propositions in relation to further actions of the EU Council.
conditions of development of gas balances, the started from Hungary under contract with FGSZ.
• Control System. The EU member countries shall report on their measures in compliance with the reporting and accounting of volumes of extracted Unfortunately, the supply was scrapped in the
Directive, existing storage capacities, incentives for investment in exploration and production, and sold gas, and gas safety stocks formation and end of 2013 because of purchase price reduction
storage, transportation of gas and construction of LNG terminals. The European Commission is usage. In early 2013, a separate order was made agreements between Naftogaz and Gazprom
engaged in monitoring of long-term contracts with third countries, gas consumption and offtake to enact a new Procedure for Developing and Ap- (see above). Ukraine is currently in the process
levels, interconnection of the national gas systems, balance between the forthcoming gas supply proving the Forecasted Natural Gas Income and of active negotiations with Slovak Eustream held
and its forecasted demand. Supply Balance1. with direct involvement of the European Com-
mission.
• Institutionalization. For the purpose of facilitating coordination in relation to security of sup- In September 2013, Ukraine took part in a session
ply, a Gas Coordination Group should be established, which shall consist of representatives of the of the EU Gas Coordination Group where it pre- Ukraine has managed to present a range of bright
European Commission, the EU member states, representative authorities of the relevant industry sented its strategy of gas supply diversification. The initiatives that need further refining. E. g., a tri-
and consumers, other interested parties. The Group shall consider the situation and, if and when European party suggested that Ukraine consider partite declaration between the governments of
required, facilitate coordination of national measures. a possibility of joining the ENTSOG transparency Ukraine, Croatia and Hungary on Adriatic gas
programme and, in particular, to the Aggregate Gas corridor project implementation was signed on
• Protection of Vulnerable Consumers. The country shall provide the proper level of protection for Stock Inventory (AGSI)2. 25 October 2013. The last public mention of the
gas supply for households, at least in the event of low temperature and high demand for gas. This Sadly, the year 2013 showed no practical progress corridor related to the intentions of signing a
circle can be expanded to small and medium businesses or other consumers, which cannot make in matters of GTS or accompanying infrastructural memorandum in November 2013.6 The project
a transition from gas to other sources of energy. projects development. The Ukrainian party once supported by the European Commission envis-
again expressed its hopes for signing GTS mod-
3
anukovych Counts on EU Involvement in GTS Modernisation,
Y
ernisation facility agreements with the EBRD and The Ukrainian Energy Sector, 29.11.2014. – http://ua-energy.org/
post/39421
1
inistry of Energy and Coal Industry Order No. 920, of 26.11.2012,
M
to Approve the Procedure to Develop and Agree Upon the Annual
4
aker Tilly Ukraine to Valuate Ukrainian GTS, BBC Ukraine, 28.03.2012.
B
Natural Gas Delivery and Distribution Balance Forecast for Ukraine, – http://www.bbc.co.uk/ukrainian/business/2012/03/120328_pipe-
the Planned (Calculated) Natural Gas Delivery and Distribution Bal- line_gas_ukraine_baker_ek.shtml
ance as well as to Form and Approve Planned Distribution of Natural 5
E nergy Community Supports Two Ukrainian Projects, The Ukrainian
Gas Supply Distribution Among Consumers, Legislation of Ukraine, Energy Sector, 24.10.2013. – http://ua-energy.org/post/38072
19.02.2014. – http://zakon4.rada.gov.ua/laws/show/z0196-13 6
emorandum on Adriatic Gas Corridor to Be Inked in a Week,
M
2
GSI, Gas Infrastructure Europe, 19.02.2014. – http://transparency.gie.
A The Ukrainian Energy Sector, 28.10.2013. – http://ua-energy.org/
eu.com/ post/38160
22 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 23ages gas supply from LNG terminal that Croatia On 26 June 2013, then Prime Minister M.Azarov Conclusion
plans to build. commissioned his Deputy Y.Boyko to prepare a
concept of energy hub development for the EU- The government saw no expediency in adopting
The formation of an East European gas hub in Ukraine Summit in Vilnius12. The Ministry of En- documents in furtherance of Directive 2004/67/EC
Ukraine on the basis of underground gas stor- ergy also expected to start hub negotiations al- requirements. Still, when it comes about energy se-
age facilities looks a more promising project7. The ready in autumn 2013 in order to switch to some curity considerations, the ‘sufficiency of regulation’
European Commissioner for Energy G.Oettinger real organisational phase in the next year13. The may not serve a justification of one’s passive stance
mentioned it in March 2013 and called promis- fiasco at the Vilnius Summit and further develop- – still more than the unique nature of Ukraine’s GTS
ing the idea of regional gas hub set up though ments in Ukraine have put this far-reaching pro- allows for not just joint infrastructural projects, but
showed scepticism about prospects of its quick ject on a long hold. also deeper forms of integration with the EU like re-
implementation.8 The Ukrainian party is set to get gional trading facilities beside a complicated com-
a possibility of spot gas purchases and GTS capac- plex of gas ‘streams’ and storage facilities.
ity increase from 32 to 55 bcm9. The then minister
E.Stavytskyi mentioned Poland, Hungary, Italy and
Germany among those willing to use the UGSF10.
Then-rresident V.Yanukovych underscored a pos-
sibility for Ukraine, following its GTS modernisa-
tion, to propose its storage facilities as the basis
for a new gas-exchange market11.
7
S tavytskyi: Ukraine May Become A Central European Gas Hub, RBK
Ukraine, 3.05.2013. – http://www.rbc.ua/ukr/top/show/ukraina-moz-
het-stat-tsentralno-evropeyskim-gazovym-habom--03052013161000
8
E U: It’s Not Realistic to See Regional Gas Hub in the Coming Years
in Ukraine, RBK Ukraine, 4.03.2013. – http://www.rbc.ua/rus/
top/show/sozdanie-regionalnogo-gazovogo-haba-v-ukraine-v-
blizhayshie-04032013105500
9
kraine to Bring Its Underground Gas Storage Facilities’ Capacities
U
by 43 Billion m3, UNIAN, 25.06.2013. – http://economics.unian.net/
rus/news/171347-ukraina-uvelichit-moschnosti-rodzemnyih-hrani-
lisch-gaza-na-43-mlrd-kubometrov.html 12
Azarov Commissions Boyko with Energy Hub Concept Preparation,
10
E uropean Nations Interested in Gas Storage Facilities of Ukraine, UNIAN, 26.06.2013. – http://www.unian.ua/news/579796-azarov-
Holos Stolytsi, 17.04.2013. – http://newsradio.com.ua/2013_04_17/ doruchiv-boyku-ridgotuvati-kontseptsiyu-energetichnogo-habu.
vropejsk-kra-ni-zac-kavlen-v-gazovih-shovishhah-Ukra-ni/ html
11
S tavytskyi: European and Ukrainian Companies Will Talk About Gas 13
hy Does Ukraine Need to Become a Gas Hub, Delo.ua, 5.07.2013.
W
and Energy Hub Creation in September, Interfax Ukraine, 26.06.2013. – http://delo.ua/business/zachem-ukraine-stanovitsja-gazovym-
– http://ua.interfax.com.ua/news/political/158504.html habom-208876/
24 PAGE Ukraine and Energy Community: Still Does Not Fit Ukraine and Energy Community: Still Does Not Fit PAGE 25You can also read
