10:17 19.06.2013

Ferrostaal says Ukrainian GTS is in good condition

Germany's Ferrostaal Industrieanlagen GmbH, which is participating in the modernization of the Bar compressor station of the Soyuz trunk gas pipeline (Barsky district, Vinnytsia region), has said that the technical condition of the Ukrainian gas transport system (GTS) is good, Ferrostaal executive director Kay Ewaldsen has said in an interview with the Kommersant publication.

"We’ve analyzed not only the Bar station, but the whole GTS, and have come to the conclusion that despite its age, it is in good condition – the country thoroughly monitored the system and maintained it well. Thus, the answer to the question what is better – a new GTS, or repairs and modernization – is very simple: the latter option is better," the publication said, citing Ewaldsen.

Ewaldsen said that the replacement of inefficient gas turbines with modern electric turbines would considerably cut expenses on gas pumping via the Ukrainian GTS.

Ferrostaal has confirmed its readiness to start the modernization of the whole GTS if Ukraine makes this decision.

Russia's Mashexport (part of the MRKS Group) will act as a partner of Ferrostaal in the project on the modernization of the Bar compressor station. If other facilities of the Ukrainian GTS are modernized, Ferrostaal is ready to attract local partners (from equipment and material supplies to engineering companies).

As reported, Ukrtransgaz, Ukraine's trunk gas pipeline operator, on April 29, 2013 signed an agreement with Ferrostaal Industrieanlagen GmbH on the modernization of the Bar compressor station of the Soyuz trunk gas pipeline. The value of the contract signed on April 29 will be EUR 51.369 million (excluding VAT). Ferrostaal is to complete the work 29 months after the contract comes into force, or by October 2015.

Ukrtransgaz and Deutsche Bank AG (Germany) on December 11, 2012 signed an agreement on opening a credit line of EUR 53.575 million for the modernization of the Bar station of the Soyuz gas pipeline.

The cost of servicing the credit line will be EUR 13.908 million. The crediting period is up to ten years and nine months from the date the loan funds are transferred to the borrower's account.

Parliament in mid-October 2012 allowed the government to provide state guarantees of UAH 560 million for the project for modernizing the Bar compressor station of the Soyuz trunk gas pipeline as part of the agreement with Ferrostaal Industrieanlagen.

Germany is prepared to provide financing for 85% of the project's price tag using Deutsche Bank credit funds. Ukraine will finance the other 15%.

The loan terms stipulate the state guarantees and loan insurance by the company Euler Hermes Deutschland AG (Hermes).

The Bar station was put into operation in 1979 and has seven gas-pumping units with a total capacity of 70,000 kW.

The Soyuz pipeline runs from Orenburg in Russia to the western border of the former Soviet Union. It was built in 1975-1978 and extends for 1,568.5 kilometers. Along its length are twelve compressor stations. Its capacity is 26 billion cubic meters per year.

Ukrtransgaz operates the system of trunk pipelines and 12 underground gas storage facilities with a total active capacity of 31 billion cubic meters on the mainland. The total length of the pipelines operated by the company is 38,600 km.

At input, the gas transport system's capacity totals 288 billion cubic meters (bcm); and at output - 178.5 bcm, including 142.5 bcm to Europe and 3.5 bcm to Moldova.

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