Ukraine to disable part of gas network

Ukrainian transmission operator GTSOU will disable part of Ukraine's transportation network because of lower expected transit volumes in the coming years.

The operator prepared three infrastructure investment plans last year based on assumptions of zero transit, 30bn m³/yr and 60bn m³/yr. Russia and Ukraine finalised an agreement facilitating transit through Ukraine late last month, with minimum ship-or-pay volumes of 65bn m³ this year and 40bn m³/yr in 2021-24. This would be down from transit of almost 90bn m³ in 2019. No transit capacity was booked for the following years, although the two sides said they would also consider a longer-term agreement for 2025-34.

Since 40bn m³ of transit is expected next year, [GTSOU] will invest in modernising only those compressor stations that will be used, and others will gradually be retired, the operator's chief executive Sergey Makogon said. The firm is preparing legislation and will file it with the government for approval, he said.

Almost 75pc of Ukraine's compressor stations would be redundant if transit were to fall to 30bn m³/yr, he said.

Ukraine's previous transmission operator Ukrtransgaz — which transferred ownership of the transmission system to GTSOU at the start of the year — carried out a number of upgrades to Ukraine's network last year, including upgrading five compressor stations adjacent to storage facilities in western Ukraine that allowed it to send gas to the central and eastern parts of the country — the opposite of the usual flow pattern — in the event that transit is suspended. The former operator also worked on a number of routes carrying Russian gas in transit across Ukraine, which will lower fuel gas consumption for shipments and reduce emissions, it said.

By Vladislav Golovin and Jacob Mandel