No time to think of heating season, as Kiev faces redistribution of control over oil and gas system

Unbundling of Ukraine’s gas transmission system operator from Naftogaz of Ukraine will hardly affect the heating season, as Naftogaz is not ready for it, anyway. Experts say the fields of influence in the oil and gas sector are being redistributed now.

As EADaily reported earlier, the Ministry of Economic Development amended the statute of Naftogaz of Ukraine and the company has lost control over Uktransgaz. The gas transmission operator is transferred under jurisdiction of the ministry. Naftogaz says this violates the terms of the credit agreement with the European Bank for Reconstruction and Development (EBRD) and leads to a default on the government-guaranteed debt as well as to a denouncement of the $500-million credit agreement with the World Bank for procurement of gas for stable winter season.

“This is nothing but redistribution of control over financial flows (head of Naftogaz of Ukraine Andrey Kobolev is considered the ex-prime minister Arseniy Yatsenyuk’s henchman – editor’s note). Now, Ukrtransgaz reports to the Ministry for Economic Development and is controlled by the president’s people,” says Dmitry Marunich, the co-chair at the Fund for Energy Strategies. “I do not think that Naftogaz of Ukraine will lost much from it. There is a project of the company’s reform, indeed, and it provides for Ukrtransgaz’s unbundling from Naftogaz of Ukraine, but not the way it has happened. I am not sure that the World Bank will refuse from providing the loan. If they manage to persuade the Bank that the process was transparent, it will issue the loan. The problem is the hysteria of the company’s leadership that suddenly lost control over one of its key assets. The transit of the Russian gas has decreased, but it brings a $2-billion income and the company’s leadership has lost control over that money.”

Meantime, preparations for the heating season are about to fail. According to Ukrtransgaz, on September 14, there were 13.3billion cubic meters of gas in the underground gasholders and the daily pumping of the own and reverse gas is 65 million cubic meters. As of November 1, the reserves of the underground gasholders will not exceed 16 billion cubic meters. Meantime, the government has envisaged 17 billion cubic meters of reserves. In addition, the heating season in Ukraine starts in mid-October and starting from that period, the gas is pumped out off and not into the gasholders. Consequently, Naftogaz of Ukraine will manage to accumulate less than 16 billion cubic meters of gas. To correct the situation, it is necessary to procure the Russian gas. Yet, Naftogaz of Ukraine has no money to procure gas from any supplier. The only hope is WB loan.