* Since late last year, limited EU imports to Ukraine
* Slovakia also working on reverse flow technology
* Ukraine seeking to increase gas storage to 50 bcm
By Barbara Lewis
BRUSSELS, May 3 Ukraine is working to become an
energy hub, producing its own gas, developing storage and
importing from both the European Union and Russia, Ukraine's
visiting energy minister said.
The European Union is pressing for agreements to be sealed
with Ukraine by the end of this year as both parties seek to
dilute Russia's dominance as a gas supplier.
But Kiev is torn between EU cooperation and Russia's promise
to cut its gas bills in return for control of its pipelines.
At the end of April, Ukraine's government asked parliament
to lift a ban on the privatisation of state energy firm
Naftogaz, which includes pipelines that pump Russian gas to
Europe. That could allow Kiev to sell or lease
them to Russia's gas export monopoly Gazprom.
Ukraine's Energy Minister Eduard Stavytsky and EU Energy
Commissioner Guenther Oettinger raised the possibility of a
three-way relationship at talks in Brussels on Friday.
"Ukraine is really trying to consider its geopolitical
situation and to establish a gas hub, so we will be able to do
spot purchases in central Europe," Stavytsky told reporters.
Guenther Oettinger said he believed EU firms were willing to
buy into Ukraine infrastructure. He did not name potential
investors, but energy firms were at the closed-door talks,
including ExxonMobil and Royal Dutch Shell.
None was immediately available to comment.
Stavytsky said $550 million was needed to modernise
Ukraine's infrastructure, of which Naftogaz could provide $240
million, while the rest would come from loans.
Since late last year, technology allowing pipeline flows to
be reversed has allowed Ukraine to import some gas from EU
nations, including Hungary and from Germany via Poland. In
addition, Slovakia is seeking to develop reverse flow
technology, with a test expected this month, Oettinger said.
As the European Commission seeks to expand its internal
energy market, it has also been working to develop Ukraine's
extensive gas storage, which could ease any supply shortages.
Ukraine already has storage of 31 billion cubic metres (bcm)
and Stavytsky said it was seeking to increase it to 50 bcm,
compared with 95 bcm for the European Union as a whole.
In the past, gas flows to the European Union have been
disrupted because of Ukraine's quarrels with Russia over how
much it has to pay for its supplies.
The European Union depends on Russia for about a quarter of
its gas, more than 60 percent of which passes through Ukraine.
All parties are seeking to broaden their options and Russia
has built pipelines to bypass Ukraine.
It wants Ukraine to join its Customs Union, while Ukraine
and the European Union are debating a free trade and political
Theoretically, it is to be signed later this year, but the
European Union said it is conditional on improved human rights
and addressing "politically motivated convictions," a reference
to the jailing of former Prime Minister Yulia Tymoshenko,
President Viktor Yanukovich's arch rival.
(Editing by James Jukwey)