MODERNIZATION OF UKRAINE'S GAS TRANSPORTATION SYSTEM: NATIONAL AND INTERNATIONAL CHALLENGES

In: Ėkonomika Ukrai͏̈ny: naučny žurnal Nacional'noi͏̈ akademii͏̈ nauk Ukrai͏̈ny i Deržavnoi͏̈ ustanovy "Institut ekonomiky ta prohnozuvannja NAN Ukrai͏̈ny" = Economy of Ukraine, Band 2018, Heft 10, S. 110-126

Abstract

It is shown that Ukraine's gas transportation system (GTS) plays a key role in the national energy sector and supplies of Russian gas to the EU. However, it is very outdated, has low competitiveness and needs urgent modernization. This is especially true of the technical-technological and organizational-managerial components of Ukraine's GTS. In this regard, it is necessary to comprehensively study the conditions, trends and mechanisms for the modernization of Ukraine's GTS in the context of convergence of the Ukrainian and European gas markets to enhance energy security and achieve sustainable development of Ukraine and the EU based on compliance with the requirements of the Third Energy Package. The research revealed the features of Ukraine's GTS modernization related to: (i) its large scale (over 38.5 thousand km); (ii) depreciation of fixed assets; (iii) a very inefficient management system; (iv) low (less than 50%) capacity utilization. This leads to a low efficiency of the GTS operation and requires significant funds for its modernization. An important direction of technical and technological modernization of the GTS is the earliest creation, especially for Ukraine, of industrial gas turbine engines of the new generation that can increase efficiency to the level of the best foreign analogues. A separate component of the technical and technological modernization of Ukraine's GTS is the adaptation of its parts to operate within underutilization of transport and pumping capacities. It is concluded that it is fundamentally impossible to increase the competitiveness of Ukraine's GTS to the European level both in the process of ongoing modernization and in the future without partnership with leading foreign gas transport companies. Partners are needed by Ukraine's operator not so much for sharing experience, but for cardinal modernization of the national GTS. Our chosen partner should take on some of the responsibility for the future fate of Ukraine's GTS.