Gas Sector Development in Ukraine. Focus on selection of GTS partner and unbundling. Milan Sedláček, eustream, a.s.

Transcription

1 eustream, a.s. Votrubova 11/A, Bratislava Gas Sector Development in Ukraine Focus on selection of GTS partner and unbundling May 2018, Budapest Milan Sedláček, eustream, a.s.

2 Eustream is the key player in transit of gas to Western and Southern Europe Key infrastructure for delivery of gas to Central and South Europe and Ukraine Biggest TSO for Russian gas towards EU Yamal (33 mld.m 3 /a) East to South South to East North South Eustream 80.3 bcm/a 14.6 bcm/a 24.5 bcm/a Veľké Kapušany

3 Nord Stream 2 Influence on Ukraine Transmission System Nord Stream 2 battle: - Side 1: Designed to circumvent the traditional gas corridor through Ukraine - Side 2: Business driven project for new volumes of Russian gas Planned expansion of Nord Stream gas pipeline Cancellation of the existing Ukrainian transmission route for Russian gas to Western and Southern Europe Lanžhot Baumgarten Veľké Kapušany 3

4 bcm/y Ukrainian Transit Corridor is Inevitably Needed to Transit Required Volumes of Russian gas for Europe even When Nord Stream II and One Line of Turkish Stream are Built There is no option for Europe other than Ukrainian corridor to deliver residual Russian gas; Veľké Kapušany (the entrance to Eustream s system form Ukraine), represents the major part of the Ukrainian corridor; Even if all capacities are utilized 90%, Ukrainian capacity still needed to deliver substantial Russian gas; Residual Russian gas supply volumes which have to be transmitted via Ukrainian corridor Direct Supply (PL, FI, Baltics) Blue Stream Turkish Stream I Yamal Nord Stream I Nord Stream II Ukrainian corridor Notes: Russian gas supply to Europe Russian gas flow to Europe 90% utilization of technical capacities of all presented pipes / corridors Nord Stream capacity assumed on level of 2016 flow Nord Stream 2 (technical capacity 55 bcm) and Turkish Stream (technical capacity 16 bcm) are also presented

5 Ukraine impressive journey towards competitive market - After Maidan - full dependence on Russian gas import - Strategic decision to import spot gas from EU - In September 2014 the new pipe in Budince was put into operation - Capacity to UA gradually increased, now 40 millions m3/day - No Russian gas then, just production and EU import - Simultaneously EU 3rd gas package: - transposition - Implementation As a result: - Gas exclusively from EU - In 2017 import 14.1 bcm via SK, PL, HU - Gas production 20.8 bcm, of which Naftogaz 16.3 bcm, others 4.5 bcm 5

6 But since country is loosing reform pace Pros: - Ukraine imports gas from Europe - Big number of importers and suppliers - EU gas suppliers start open offices in Ukraine - Daily balancing coming - Commercial gas stock reserve requirement no longer damaging Cons - Legal framework for cross-border trade and storage is still not perfect - Real regulatory independence and power - High entry-exit tariffs at interconnectors, financial guarantees - Unbundling of the transmission is yet to be completed - Retail sector prices under the PSO decree. - Retail sector is not open for competition - Future of gas transit uncertain NAK import NAK production Others import Others production 6

7 December 2017 Call for expression of interest for GTS partner Call for expression of interest in relation to the engagement of a partner of the Main Gas Pipelines of Ukraine Public Joint Stock Company (MGU) for the operation and management of the gas transmission system of Ukraine From July 2016, in accordance with the requirements of the EU Third Energy Package and the Cabinet of Ministers of Ukraine Resolution No. 496 of July 1, 2016, the process of unbundling activities on transportation and storage of natural gas from the Naftogaz of Ukraine National Joint-Stock Company is underway. By this call of interest and in accordance with paragraph 1 of the Cabinet of Ministers of Ukraine Resolution 1005 of December 13, 2017, we invite potential GTS partners to the preliminary consultations with the aim to discuss conditions of a would-be contest to select partner/s for PJSC MGU. 7

8 Memorandum of Understanding aimed at cooperation opportunities in Ukraine s gas transmission network Rome, 10 April 2017: Italy s Snam, Slovakia s Eustream and Ukraine s Naftogaz and Ukrtransgaz have signed a Memorandum of Understanding aimed at jointly evaluating opportunities for collaboration in the operation and enhancement of the gas network in Ukraine. The MoU was signed in the presence of Mr. M.A. Canete EC Commissioner for Climate Action & Energy, Italy s Minister of Economic Development Carlo Calenda, and Ukraine s Minister of Energy Ihor Nasalyk.

9 Capacity, Year 2011=100% 110% 100% 90% 80% 70% 60% Why Eustream is in a position to help Nord Stream Impact on Eustream Czech Republic (CZ) Capacity shifted to Nord Stream Ukraine (UA) Austria (A) 100% Expected impact of Nord Stream Technical capacity Contracted capacities The total power reduction is approximately 50% of the current aggregated power. The maximum technical capacity of the system with reduced power is higher than 75% of the premodernization phase technical capacity This capacity provides sufficient reserve from both a medium and long term perspective.

10 Principles of Proposal Proposed Operation / Financial Concept: has already been fully implemented in other European countries before; GTS Partners (Western European partners) have their own experience with a such operation and financial structure from the past; is fully in compliance with the valid EU s law(s) and regulation; is fully compatible with the EU 3 rd Energy package; supports the unbundling process in respect to the Cabinet of Ministries of Ukraine Resolution No Proposed scheme will allow for: securing long-term transit contract(s) investment into transmission network modernization preparation of the framework for final privatization securing majority of transit capacity (key interest of EU and its final consumers) 10

11 Impact of Stockholm arbitrage on unbundling 11

12 Impact of Stockholm arbitrage on unbundling 12

13 Unbundling ping-pong NAK chooses PWC Govt. Creates MGU Rothschild Call for EI NAK after Stockholm Tender postponed Who now? 1. One voice from Ukraine is needed. For the benefit of Ukraine. Who now 2. Decision from Ukraine is needed. For the benefit of Ukraine. 13

14 Final conclusions 1. Eustream is very well positioned and motivated to help, offering its experience and know how. 2. Gas transit through Ukraine is in natural interest of Eustream. 3. Together with Snam exhaustive analytical work has been done. 4. Unbundling and further steps must be done not to loose momentum. 5. Goal is achievable but all efforts must be done.