Ukrainian Gas Transmission System and Energy Security MYKHAILO GONCHAR NOMOS Center Ukraine Kyiv, April 22

Gas Transmission System of Ukraine provides Russian gas transit to end consumers (~85 from 113 bcm in 2012)

All gas flows are mixed in one pipeline NOTA BENE: Ukrainian Gas Transmission System isn’t a transit pipe from RF to the EU only GTS provides for Ukrainian consumers: Delivery of domestic gas (~20 bcma) Delivery of imported gas (~35 bcma) Gas storage (total capacity – 31 bcm) All gas flows are mixed in one pipeline 114 different industrial consumers in 97 points are connected to 4 main transit pipelines systems: Soyuz, Progress, UPU, EKAI

Ukrainian dimension of UA-RF Gas Consortium: Gazprom operation of GTS is a challenge not only for energy security… Gazprom’s operation of GTS means control NOT ONLY over transit gas flows from Russia to Europe but over gas supplies to state owned and private (oligarchic) industrial assets It means control of Ukrainian economy; It means involvement into Customs Union and ANSCHLUSS of Ukraine by Russia under umbrella of the Eurasian Union UKRAINIAN CONTROL OVER GTS MUST BE KEEPT BUT EUROPEAN REFORM MUST BE IMPLEMENTED

European dimension of Gazprom’s bypasses: The scheme of future gas streams according to Russian dreams or All routes are in Gazprom’s hands NORD STREAM YAMAL-EUROPE MAINSTREAM.UA Hub Baumgarten SOUTH STREAM TANAP+NABUCCO

European dimension of Gazprom’s bypasses: Surplus of pipelines capacities from Russia is a challenge for stability of gas supply to Europe Route Capacities, bcma Ukrainian mainstream 142 Belorussian direction 35 Blue Stream 16 North Stream + Finland 55+7 Nord Stream (III-IV) 55 Yamal – Europe - II 15 South Stream 63 Total: existing/future 255 / 388 Gazprom’s export to Europe –138 bcm in 2012 (<113 bcm physically). Contracted gas volumes (LTC) for 2020-2025 ~158 bcma Surplus: 142 / 230 bcma

Consequence 1: Surplus of capacities will generate manipulation of export’s routes and volumes which will generate instability of spot prices

Possible interruptions Consequence 2: Future gas supplies to Lithuania and Ukraine are under risk of interruptions According to order dated November 2012 Kaliningrad interconnector has to be built Yamal Europe - II According to order dated April 2013 Possible interruptions

Consequence 3: Concession of Ukrainian GTS by Gazprom means crash of gas supply diversification by reverse of existing pipelines and LNG-Project

Consequence 4: Concession of Ukrainian GTS by Gazprom means additional barrier to involve Black Sea shelf and unconventional gas flows into GTS to be delivered to domestic and foreign consumers

SOME CONCLUSIONS UKRAINIAN CONTROL OVER GTS MUST BE KEEPT REFORM OF GAS SECTOR MUST BE IMPLEMENTED ACCORDING TO THE ENERGY COMMUNITY MEMBERSHIP OBLIGATIONS UKRAINE SHOULD IMMEDIATELY JOIN IIIrd ENERGY PACKAGE OF THE EU REVERSE GAS FLOWS FROM EUROPE TO UKRAINE MUST BE SUPPORTED, PROTECTED AND UPGRATED BY JOINT EFFORTS OF EC, POLAND, SLOVAKIA, HUNGARY AND UKRAINE IMPLEMENTATION OF BRUSSELS DECLARATION ON MODERNIZATION OF UKRAINIAN GTS INVOLVEMENT OF UGSF INTO EUROPEAN GAS STORAGE OPERATIONS

Дякую! Thank you! NOMOS/Strategy XXI www.nomos.com.ua geostrategy.org.ua mi.gor17@gmail.com