Ukraine may decommission part of gas network on lower Russian supplies: paper

KIEV (Reuters) - Ukraine may decommission part of its gas transit system due to a sharp fall in the amount of Russian gas being pumped to Europe via Ukraine, the head of Ukraine’s gas transport monopoly Ihor Prokopiv was quoted on Tuesday as saying.

A pressure gauge is seen at a gas compressor station and underground gas storage facility in the village of Mryn, north of Kiev, Ukraine, October 15, 2015. REUTERS/Gleb Garanich

Around 40 percent of Russia’s gas exports to Europe currently pass through Ukraine but several new gas pipelines elsewhere and an uncertain future for Ukrainian gas deals with Russia could leave Ukrainian transit pipelines redundant within a few years.

“Taking into account the considerable surplus capacity of Ukraine’s gas transportation system, with 30 percent of its gas compressor stations in standby mode, it is obvious that the unused assets must be decommissioned,” Prokopiv told NV Business magazine.

He said the government was preparing for different supply scenarios.

“We have a clear strategy for the next 10 years, according to which we will soon begin to optimize the gas transport system to make it ready for... zero, 30 and 70 billion cubic meters (bcm) of transit through the territory of Ukraine,” he said.

He said Ukraine, which used to transport 110 bcm of Russian gas to Europe, had already lost around 40 bcm of transit after Russia’s Gazprom launched the Nord Stream pipeline to Germany and boosted the transit capacity of the Belarussian gas system.

“The Russians would like to completely discredit Ukraine. They wanted to launch another flow - the Nord Stream 2 and also bypass Ukraine in the southern direction, building a so-called South Stream. This is a threat to Ukraine,” Prokopiv said.

He said Ukraine had already faced a significant surplus in its transit capacities, with around a third of its pumping stations standing idle.

Earlier this year Prokopiv said Russian gas supplies to Europe via Ukraine could slightly increase this year but added that the longer term outlook was for gas transit levels to decrease.

Relations between the two nations have suffered since Russia’s annexation of Crimea in 2014. Ukraine has not bought gas directly from Russia since November 2015, importing instead from Europe.

Reporting by Pavel Polityuk; editing by Matthias Williams and Jason Neely