22:47 15.09.2017

Siemens stops equipment shipments for Ukraine's gas transportation system due to pressure of Russia

3 min read
Siemens stops equipment shipments for Ukraine's gas transportation system due to pressure of Russia

Fearing to lose the Russian market, Siemens has refused to continue shipments of equipment for the modernization of the Ukrainian gas transportation system (GTS), CEO of NJSC Naftogaz of Ukraine Andriy Kobolev has said.

"Siemens called and said that if they brought more [equipment], they would lose the Russian market," Kobolev announced at the 14th annual YES conference in Kyiv on Friday, September 15.

He said Ukraine had to negotiate new supplies with General Electric.

The press service of Naftogaz Ukrainy said that Ukrtransgaz late April 2013 signed a government-secured contract to reconstruct the Bar compressor station with Germany's Ferrostaal Industrieanlagen GmbH as part of the credit line provided by Deutsche Bank. The contract included the turn-key designing of the project, including the feasibility study and construction. It was decided to use Siemens turbines during the reconstruction.

"However, in four months Ferrostaal sent a letter to Ukrtransgaz that Siemens refuses to supply the turbines for this project. The reconstruction project had to be changed. The new optimal decision was the use of General Electric equipment," the press service said. The new feasibility study was approved by the Cabinet Ministers of Ukraine at the end of 2015. Then two GE PGT25 turbines were bought.

"Last week the shipment of the equipment under the project was started. The first batch of equipment arrived in the warehouse of the Bar compressor station. The completion of the Bar compressor station reconstruction project is scheduled for 2018," the press service said.

Kobolev also said that for the modernization of Ukraine's GTS, it is necessary to evaluate prospects for transit supplies of Russian gas after Ukraine's contract with Gazprom expires in 2019. Thus, he once again stressed the need to oppose the Russian Nord Stream 2 project as a politically motivated one.

He cited the example of the South Stream project, proposed by Russia, which, in connection with its approval by Turkey, means the loss of the southern branch of the Ukrainian GTS.

Vice-President of the European Commission in charge of Energy Union Maros Sefcovic believes that Ukraine should make its gas transport system attractive thanks to the creation of an independent regulator and the unbundling of Naftogaz, then investors will come and bring investment for its modernization.

He said that he discussed the issue with the European Bank for Reconstruction and Development (EBRD) and other possible creditors. Sefcovic added that the issue will be urgent for settling after receiving the final decision of the Arbitration Institute of the Stockholm Chamber of Commerce in the dispute between Naftogaz and Gazprom.

Vitol President and CEO Ian Taylor said that Ukraine should not worry about the Nord Stream 2 project. Ukraine should form own energy policy, he said.

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