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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Ukrainian gas transportation system gets investors..

Experts of The Day distinguish positives of this decision and do not see any risks
24 June, 2014 - 11:47

The tension and threats for the national security in the gas sphere of Ukraine is not much different from the situa­tion in the East of the coun­try where a vast anti-terrorist ope­ra­tion is lead. It is no coin­ci­dence that recently the Ver­khov­na Rada agreed to include in their agenda the governmental draft law on modernization and reo­rga­ni­zation of the Ukrainian gas trans­­por­ta­tion system. In par­ti­cular, it sug­gests involving investors of the EU and the US into the process.

Arsenii Yatseniuk claimed from the parliamentary tribune that “we suggest that the decision on involving investors into the operating company would be approved by the Verkhovna Rada. We will bring the companies that will be selected in open tenders.” “The Ukrainian people have to know which investor is involved into maintenance and moder­nization of the Ukrainian gas transportation system,” prime minister remarked. “Those have to be well-known key European and American companies that have to get an agreement and guaranties from the Ukrainian parliament.”
We remind our readers that the current legislation prohibits any disposition of property and assets of the Ukrainian gas transportation system. Nevertheless, the suggestion of the head of Parliament influenced the MPs and they agreed to discuss this issue. However, its further examination was postponed since some MPs voiced their fears that the document would be successfully adopted as the Council Cabinet approved it during its session the day before.

“What does the government suggest?” Yatseniuk asked the law-makers. “According to our obligations within the Energy Charter and as a member of the European Energy Community we have to make a number of decisions that will create a new mo­del of functioning of the energy market.” Prime Minister explained that the draft law suggested by the government provides preserv­ing the gas transportation system including the pipes and storages in the property of the state and creation of an operating company; the controlling share will also be owned by the state and a share of 49 percent can be sold to European and American gas transportation companies that have necessary certificates.

Prime Minister assured that the implementation of the project will allow not only modernizing the Ukrainian gas transportation system and increasing its capitalization, but resisting the construction of the bypass pipe­lines. “It gives a possibility to stop the construction of the South Stream and direct all the gas through the Ukrainian gas transportation system since the EU members will be especially inte­rested in it,” Yatseniuk believes. The draft law removes restrictions on renting the main gas pipelines and underground sto­rages by enterprises on a paid basis without the right to convey them in order to operate the gas transportation system and under­­ground gas storages.

However, those functions can be assigned only to an enterprise whose founder and owner is the Ukrainian state, a state enterprise (not less than 51 percent of the corporate rights) or a legal entity (legal entities) that belongs to and is controlled by residents of the EU, the US, the European Energy Community and a certified operator of a gas transpor­tation system or a member of the European Gas Transmission System. The same conditions should be applied to an operator of the underground gas storages. The draft also orders the Ministry of Energy and Coal Industry of Ukraine to take measures to make Naftohaz cease performing its “functions of the operator of the gas transportation system and hand them over to Ukrtranshaz.”

At first glance everything is thought-over and realistic, so why were the MPs somewhat careful by postponing the draft. The Day has asked its experts bout the hidden risks of the suggested draft.

Ivan NADIEIN, head of the Committee on the Energy Security of Ukraine:

“In order to allow Europe to buy the Russian gas at the eastern border of Ukraine and not at the western one Ukraine has to create a kind of a consortium we tried to create with Russia some time ago. Today its participation is no longer possible; however, the participation of the Europeans is very powerful and gua­ranties the energy security for Ukraine and Europe. This is the only possible option in the current conditions and I cannot see any risks if it is implemented.”

Ivan DIIAK, former MP:

“There would be big risks if we placed our gas transportation system under management of fo­reign companies including Rus­sian ones. Fortunately, it is not a question any more. Moreover, Ukraine will have the blocking share holding. I am only afraid that in this case Russia will start throwing sand in the wheels. As long as Russia is a monopolist, it will use both economic and political leverage. So, I do not see any risks for Ukraine in this draft. However, it is important that we give those 49 percent to the right European companies. If Russia manages to get there somehow, it will start pushing for its rights instead of pumping gas.”

Leonid UNIHOVSKY, director general of a limited company Naftohazbudinformatyka:

“Certain risks can always arise. However, every system of risks has a system of counterbalances and compensations. Everything will depend on the scheme. The key elements should be the complete legal subordination of the created structures to a Ukrainian regulator and making it (the National Commission for Energy Regulation) more independent. It is an extremely important component. The idea is OK. There will not be a need for any bypass ways. Our underground storages will remain certain buffer on the ways of trans­mitting gas to Europe. So, this approach is beneficial for Rus­sia as well from the point of technologies and business. If European operators take part in it, there will be more possibilities to keep the Russian gas in our sto­rages and we will in fact join the united gas transportation system of Europe.”

By Vitalii KNIAZHANSKY, The Day
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