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Ukrainian GTSO’s positive developments and challenges ahead

Ukraine’s gas transmission system operator (GTSOU) has fully ensured uninterruptible gas transmission to European and Ukrainian consumers during the first half of the year. Furthermore, the company has become one of the largest taxpayers in Ukraine.

The GTSOU is systematically working on the liberalisation of the Ukrainian gas market and its integration into the European one, as well as on the introduction of new services and opportunities for its participants.

In particular, in the first half of 2020 the possibility of virtual reverse (backhaul) on Polish, Slovak and Hungarian routes was launched for the first time. The single virtual interconnection points with Poland and Hungary were created for the convenience of traders and a transparent mechanism for capacity allocation for 2021 using auctions on certified platforms was implemented.

The GTSOU also applied a new progressive approach to gas procurement and obtained an optimal market price that correlates with quotations on European gas hubs.

“The new independent Gas TSO succeeds,” said Sergiy Makogon, General Director of the GTSOU. “We ensured uninterrupted gas supply to Ukrainian consumers and fully transit gas to the EU and Moldova. We have a highly qualified team of 11,000 employees, which guarantees the safe operation of the GTS with its daily continuous work. The Gas TSO is becoming a powerful state-owned company that effectively uses the Ukrainian state-owned GTS and pays significant funds to the state in the form of taxes and to the shareholder in the form of dividends. […] We confidently look to the future and are ready for new challenges.”

Within the first 6 months of 2020, the Gas TSO of Ukraine transited 24.9 billion cubic metres (bcm) of gas under the new transit deal, which is 45 per cent less than in the first half of last year. At the same time, natural gas imports from the EU reached 7 billion cubic metres, 24 per cent more than in the same period last year.

And, most importantly, for the first time in the history of the Ukrainian GTS, gas transit was available not only for Russia’s Gazprom but also for other international companies – between EU countries through Ukraine.

Regarding its sustainable programme, one of the key strategic initiatives of GTSOU is to reduce the negative impact on the environment. The company has approved the Environmental Policy and Energy Policy, which provide for mandatory environmental impact assessment during the realisation of all projects of reconstruction and building of compressor stations.

Following the results of the first half of the year, GTSOU significantly reduced emissions of pollutants, including due to a significant reduction in transit volumes: CO2 by 62 per cent, methane by 22 per cent, nitrogen compounds by 56 per cent and water usage by 28 per cent.

The company has also carried out more than a thousand environmental measures – environmental and technical inspections of gas pumping units, laboratory quality control of surface wastewater, the organisation of a system of separate collection and delivery of secondary raw materials.

In order to reduce natural gas emissions, GTSOU is using new technologies to identify and eliminate the sources of gas emissions and is considering the possibility of moving to the transportation of renewable gases (hydrogen and synthetic methane) in the future.

However, despite the successful results for the first six months, the Gas TSO of Ukraine is still facing the unresolved challenges and problems.

Among those, there are the historical problem of imbalances and the risk of completing bypass pipelines – North Stream 2 and the continuation of Turkish Stream to Hungary via Bulgaria and Serbia. In addition, the company is actively preparing for the opening of the gas market for the people and the abolishment of public special obligations (PSO).

For the second half of the year, the priority tasks to be solved with the neighbouring Gas TSOs are to switch over to a single virtual interconnection point on the Slovak-Ukrainian border, to establish a transparent procedure for gas transportation through Moldova, which will allow full use of the Trans-Balkan gas pipeline in both directions. Also, it is extending the interconnection agreement to all connection points with Romania, which will open access to the Romanian market.

“The Ukrainian GTS does not exist in itself,” commented Olga Bielkova, Director on Government and International Affairs of OGTSU. “It is a full-fledged part of the European gas transmission network. And we are very dependent on how many bypasses will be built around us. Therefore, we are also purposefully working on Nord Stream 2 and Turkish Stream projects, which, despite their different capacities, are equally threatening for Ukraine, its economic interests and national security.” 

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