Naftogaz asks court to revise Gazprom transit deal, considers new pipeline

Макроэкономика 15.10.2014 Ukraine’s gas giant Naftogaz has appealed to the Stockholm Arbitration Court with the request to revise its natural gas transit contract with Gazrpom, the Interfax-Ukrayina news agency reported on Oct. 14, citing Naftogaz official Yuriy Vitrenko. The company is demanding that a new contract for the provision of gas transit services should correspond to the rules of the EU’s Third Energy Package, which Ukraine promised to comply with since January 2015. On top of that, Naftogaz is demanding compensation from Gazprom for under-supplying gas for transit. In other news, among the top managers of Polish energy holding Polenergia, Radosław Dudziński, told a reporter for the Ukrinform news agency that Ukraine and Poland are considering the construction of a new gas pipeline worth about EUR 200 mln. The 110 km pipeline may enable Ukraine to import annually 8 to 10 bcm of gas as of 2019 or 2020, Ukrinform reported. Polenergia is cooperating with Ukraine’s Naftogaz on the project’s design, seeking its financing, and will also consider its own participation in the project, according to Dudziński. He also stressed that the Ukrainain side is determined to implement this project to decrease its gas dependence on Russia. Alexander Paraschiy: The Oct. 14 news flow suggests that Ukraine is not counting on a successful deal at the next round of trilateral negotiations on natural gas, which should take place next week. The news on planning a new pipeline with Poland to increase its gas reverse capacity looks especially disturbing to us. Ukraine’s eagerness to implement the project implies it has little hope that EU operators will start buying Russian gas on Russia-Ukraine border. If EU traders start buying gas from Russia on the Ukrainian-Russian border (and we believe this should be the primary goal of Ukraine’s government in its talks with EU energy officials), that would enable Ukraine to buy cheaper Russian gas from EU traders on its own territory, eliminating the need for expensive reverse projects.