Ukraine and the European Union have launched a comprehensive study project for the Ukrainian underground gas storage (UGS) facilities. A kick-off meeting took place at the premises of the Delegation of the European Union to Ukraine on 12 July 2017. The event was attended by representatives of Naftogaz, Ukrtransgaz, the Ministry of Energy and Coal Industry, the Ministry of Economic Development and Trade, the Energy Community Secretariat, MGU and international advisors, selected by the EU. The project will be implemented by a consortium consisting of a top global management consulting firm, French operator of underground gas storages (Storengy) and an international law firm (CMS Cameron McKenna Nabarro Olswang).
The project is funded by the European Union and is designed to build up a sustainable business case for Ukraine’s underground gas storage facilities in the context of the European and Ukrainian energy market. Naftogaz will participate in the project’s steering committee, along with other key stakeholders, including representatives of the Ukrainian government.
“We are grateful to the European Commission for its continuing support in implementing the gas market reform in Ukraine. This project will enable us to use the top-quality professional advice to develop the optimal strategy for Ukraine’s unique underground gas storage infrastructure,” commented Andriy Kobolyev, CEO of Naftogaz.
The research will look into the demand for gas storage products in the following 20 years and opportunities for Ukraine in the UGS market. The findings will be used to generate several strategy scenarios for the optimal use of Ukraine’s UGS facilities.
The project team will analyze whether any of the storage facilities are necessary for an efficient operation of Ukraine’s gas transmission system. The project is therefore important to the implementation of the Law of Ukraine “On the natural gas market” and the fulfilment of Ukraine’s commitments towards the unbundling of the gas transmission function from Naftogaz.
Storengy, one of the leading operators of natural gas storage in the world, will conduct the technical audit for each gas storage facility. After the initial data analysis, the team will visit the sites and provide a detailed technical assessment.
CMS Cameron McKenna Nabarro Olswang will analyze the existing legal framework and its compliance with the Third Energy Package and other EU regulations. Having advised most of EU gas suppliers to Ukraine, the company is well positioned to collect data about the existing legal bottlenecks and barriers to an increased use of Ukraine’s underground gas storages. The legal aspect of the study also includes drafting laws, bylaws and decisions.
Naftogaz of Ukraine, the country`s national oil and gas holding, is a 100% shareholder of Ukrtransgaz, which manages the largest UGS facilities in Europe with a total capacity of 31 bcm. Approximately 50% of this capacity has been used in recent years. Ukraine intends to expand the use of the storage facilities, including through the development of attractive access conditions for international customers.
Storengy, a subsidiary of ENGIE, designs, builds and operates storage facilities for 60 years, owning 21 sites (in France, Germany and the United Kingdom) with a total capacity of 12.2 bcm. As an active player in the energy transition, Storengy offers its technical expertise to numerous partners around the world.
CMS Cameron Nabarro Olswang is a multinational law firm headquartered in London, United Kingdom delivering services to various industries, with particular focus on energy sector. The company is part of CMS organization of law firms, with 71 offices in 40 countries of the world.
NJSC Naftogaz of Ukraine