The Gas Transmission System of Ukraine (GTS) is operated at less than 20% of its design capacity, while its maintenance remains rather expensive for customers of transmission services.
That's according to the head of the dispatching department at "YE Energia" Volodymyr Hnoyevyi who spoke at the Ukrainian Gas Open forum.
"In general, our GTS is able to transmit about 400 billion cubic meters of gas. At the same time, Ukraine transmits about 30 billion cubic meters for consumption, while transit stands at about 40 bcm. That is, we see that the gas transmission system is operated at less than 20% of its design capacity," he said.
Read also Ukraine's war on Gazprom: Nord Stream 2 should fulfil European directives Hnoyevyi noted ineffective management of the GTS leading to significant financial losses.
"Today, the maintenance of excess capacity is fully covered by transit funds. If the transit contract with the Russian Federation is not extended after 2024, this financial burden will fall on the shoulders of household consumers," the expert said.
He added that the Gas TSO of Ukraine operator last year earned UAH 47.5 billion on international activities and UAH 10 billion – on the provision of transmission services on the domestic market, of which UAH 4 billion was received for balancing services.
"Out of the 10 billion earned by Gas TSO of Ukraine off gas transmission services for domestic customers, 4 billion it earned on settlement of daily imbalances. That is, Gas TSO actually earns on the type of activity on which, according to European norms and rules, it shouldn't earn," stressed Hnoyevyi.
To resolve these issues, he proposed to create an independent Market Operator, which would take over some of the functions that are not supposed to be fulfilled by Gas TSO, namely, the administration of the gas market.
"This will allow increasing transparency for service customers and in the future, along with the redesign of the GTS – minimizing the financial burden on market participants, which ultimately will affect all gas consumers in Ukraine," summed up the expert.
Read also Gazprom snubs Ukraine's offer to transmit more gas to Europe via its GTS Earlier, the head of the Association of Energy Suppliers Artem Kompan said that the existing balancing system in Ukraine is destructive both for the supplying companies and for the development of the market as a whole. According to him, against the background of draconian marginal prices set by Gas TSO, companies are unable to respond quickly and settle the imbalances that arise.
On May 12, 2021, the North-West Commercial Court of Appeal satisfied the appeal of Khmelnytskgaz JSC, the defendant in the suit of Gas TSO of Ukraine. The latter failed to prove in court that the company took actions to resolve the imbalance, as required by the provisions of Section XIII and Section XIV of the GTS Code. According to the court decision, the lack of transparency in the actions of Gas TSO may indicate a concealment of the absence of balancing actions, for which customers are charged for gas transmission services.
Translation: Yevgeny Matyushenko