12:31 07.12.2012

Ukraine should give strong response to support for South Stream by Energy Community, say experts

3 min read

Despite the European energy legislation and Ukraine's requests as a member of the community, the Energy Community actually supports the project for the construction of South Stream gas pipeline by Gazprom, which puts the future of the Ukrainian gas transport system in doubt, and Kyiv should strongly react to this, according to Ukrainian experts.

"Now we could recommend the Energy and Coal Industry Ministry and other executive power bodies to change the form of relations with the Energy Community until a decision on the importance of the reconstruction of the Ukrainian gas transport system is made and promises to finance it are kept," Deputy Head of the Expert Council on the Development of Gas Industry and the Natural Gas Market Leonid Unihovsky said at a press conference at Interfax-Ukraine on Thursday.

The expert said that the realization of the South Stream project, construction of which will be started on December 7, 2012, brings a direct threat to Ukraine as a key gas transit country to European countries from Russia. He said that the new gas pipeline with a projected capacity of 63 billion cubic meters, could cause the fall in gas transit via Ukraine to 35-40 billion cubic meters per year, while at least 62 billion cubic meters is required for its profitable operation.

Unihovsky said that in this case it is likely that Ukraine will have to shut down two out four lines.

Secretary of the Expert Council on the Development of Gas Industry and the Natural Gas Market Serhiy Diachenko said that the South Stream project is a political one, and its realization would require investment of EUR 35 billion, while the expansion of the capacity of the Ukrainian gas transport system could be cheaper. It would have ensured great reliability and it would not involved manmade risks.

He added that the South Stream is not in line with the declared purposes of diversification of the gas supply routes, being in effect a replacement for the Ukrainian gas transport system, while operating expenses on its functioning will be very high, and the high fee for gas transportation will fall to European consumers.

"The South Stream project is in line with the interests of Russia, companies participating in the project, and those European countries through which territories it passes, and which supported it. The project is not in line with the interests of European society as a whole," Diachenko said.

An independent expert, Valentyn Zemliansky, said that Ukraine's integration into the European Community and implementation of European laws caused the negative reaction of Russia and complicated relations between the two countries, although Ukraine has not obtained the expected support from the Energy Community in gas talks with Russia.

"Over the past two years we haven't obtained any support on holding talks on the revision of the gas price. Ukraine should get a clear answer from the Energy Community: who are we? Unloved guests, or full members that will be supported by the European Union in all our undertakings, from the implementation of the new European energy laws to the use of the Ukrainian gas transport system in the direct mode, if the Belarusian and South Stream projects are realized," Zemliansky said.

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