Germany Helps Modernize Ukrainian Gas Transporting System

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Germany Helps Modernize Ukrainian Gas Transporting System

PR Newswire KYIV, Ukraine, December 12, 2012

KYIV, Ukraine,December 12, 2012/PRNewswire/ --

Ukraine starts the first joint project regarding the modernization of its gas transporting system. Renovation works at the compressor station Bar of the cross-country Soyuz pipeline will be financed through Deutsche Bank AG credit line. Ukrainian state company Ukrtransgas will receiveEUR 53.5 millionfrom the German bank.

The modernization is expected to prolong the operating life of the compressor station by 15 years, reduce fuel gas consumption by 28 percent, as well as boost energy conversion efficiency of gas compressors by 10 percent.

Deutsche Bank AG will provide funds to cover 85 percent of the cost of the project. German government will support all efforts to modernize Ukraine's gas transporting system (GTS), stated the German Ambassador to Ukraine Christof Weil in his comment of the signing of the agreement between the two companies. He noted that modernization was politically significant, since Ukraine transported energy resources to Germany.

Equipment upgrade at the compressor station Bar will be performed by German Ferrostaal Industrieanlagen GMBH, as agreed with Ukrainian company Naftogaz inJuly 2012. At the time, the German company informed that the renovation would pay off faster than the Russian alternative pipeline - South Stream - becomes operational.

Soyuz pipeline has the capacity of 26 billion cubic meters of gas per year. It was built in 1975-1979 and features 12 compressor stations. The pipeline delivers gas to the European countries from Orenburg gas field. The compressor station Bar was opened in 1979.

Modernization of the Ukrainian GTS was set to becom e one of the main tasks of a tripartite gas consortium, featuring Ukraine, the EU and Russia. Ukraine called for the creation of such consortium inFebruary 2012. In October 2012, the Head of the Delegation of the EU to Ukraine Jan Tombinski informed the EU was set to contribute to the modernization of Ukrainian GTS.

Reportedly, Ukraine uses about two thirds of the estimated capacity of its GTS. Nonetheless, it already supplies 70 percent of Russian gas to Europe. Its renovation would allow for the increase of its transfer capacity, save time, financial and human resources, as well as help avoid threats to the environment that come with the building of alternative gas transit routes to Europe.