Ukraine would not be able to attract foreign investor to GTS without separating underground storage facilities

Ukraine would not be able to attract a foreign investor to the management of the gas transport system (GTS) without its separation from underground storage facilities, Naftogaz Ukrainy has said.

"Western companies are interested in gas transportation business, and not in the development of the gas storage segment which is loss-making both in Ukraine and Europe [due to extra gas supply, the narrowing of the spread between the prices of gas in winter and summer]," the company said in a presentation devoted to the reformation of the company.

Naftogaz said that the gas storage segment in 2014 brought loss of UAH 3 billion (compared to UAH 700 million a year ago) under international financial reporting standards.

"The cost of our underground storage services [the largest in Europe] is very high, while investors are not interested in investing much in the segment, as business is loss-making, there is no a development strategy, and Gazprom is blocking interconnectors," the company said.

Naftogaz said that the attraction of an investor to the management of the GTS is vitally important, as this would allow loading the system, improving it and bringing its operation to transparent standards.

The company proposed that public joint-stock company Trunk Gas Pipelines of Ukraine is selected the operator of the GTS that will operate in the structure of the State Property Fund and use the infrastructure under operational control. The underground storage facilities should be left at Ukrtransgaz which will belong to Naftogaz Ukrainy.