November 6, 2015 / 12:42 PM / 2 years ago

Nord Stream-2 pipeline to kill Ukraine's gas transit business - Naftogaz CEO

FRANKFURT/KIEV, Nov 6 (Reuters) - The head of the Ukrainian state-run energy company Naftogaz has said a proposed new pipeline to pump Russian gas to Europe would spell the end for Ukraine’s gas transport business.

In September, Russia’s Gazprom formed a consortium with E.ON, BASF/Wintershall, OMV , ENGIE and Royal Dutch Shell to develop the Nord Stream-2 pipeline, which could allow Russia to bypass Ukraine completely from 2019.

“If Nord Stream-2 operates, Ukraine will be dead as a transit land for Russian gas,” Naftogaz CEO Andriy Kobolev told the German daily Handelsblatt in an interview published on Friday.

A U.S. official this week said the pipeline risked depriving Ukraine of more than $2 billion in transit fees, and ran counter to the EU’s goal of reducing its energy reliance on Russia.

Gazprom already sends gas to Germany across the Baltic Sea via the Nord Stream pipeline, and Nord Stream-2 would double the capacity of that pipeline to 110 billion cubic metres (bcm) per year.

Naftogaz has said that it lost at least 34 billion cubic metres of gas transit volume last year because of Nord Stream. Ukraine, which has the capacity to pump 151 bcm of gas a year to Europe, transported 62 bcm of Russian gas in 2014.

There are currently four routes to deliver Russian gas to Europe: Ukraine, Nord Stream, Yamal-Europe and Blue Stream. Last year, Russia supplied 34 bcm of gas via Nord Stream, 37 bcm via Yamal-Europe and 14 bcm via Blue Stream.

Kobolev also said that Naftogaz had recently signed a contract to buy gas from a German utility, which he did not name, saying this was cheaper than buying it from Gazprom.

A spokesman for Naftogaz declined to name the utility. (Reporting by Christoph Steitz and Pavel Polityuk; Editing by Kevin Liffey)

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