Ukraine Gas Pipeline Gets European Funding

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Funding to upgrade the key Ukraine pipeline carrying Russian gas into Europe has been approved by the European Investment Bank (EIB).

EIB President Werner Hoyer, and Ukraine's Prime Minister, Arseniy Yatsenyuk, signed an agreement for the bank to loan Ukraine €150 million ($185 million) for the overhaul and reconstruction of the Urengoy-Pomary-Uzhgorod pipeline, also known as the Trans-Siberian, or, West-Siberian Pipeline.

The pipeline is the main conduit for Russian gas that travels through Ukraine before reaching Europe. It measures 4,500 kilometers (km) long--1,160 km of that in Ukraine--and has a diameter of 56 inches. The annual capacity of the pipeline is more than 100 billion cubic meters of natural gas. It has 42 compressor stations along its length-nine of them in Ukraine.

The EIB has made the loan to Ukraine's state-owned gas utility, Ukrtransgaz, which plans to replace 119 km of corroded pipeline, as well as upgrade two compressor stations, during the next four years. The project will also attempt to increase energy efficiency and reduce emissions.

"The EIB is committed to supporting priority projects in Ukraine so it can better face its recent challenges," said Hoyer. "The EU bank stands ready to sign more than €1 billion [$1.2 bn] in total loans for this year, as part of the €3 billion [$3.7 billion] package targeted for 2014-2016."

About 30% of Europe's gas needs are met by Russian imports, and the issue of gas security has become a major concern in recent months, due to the ongoing Ukraine-Russia conflict. Last month, the European Union negotiated a temporary gas truce between Russia and Ukraine to help secure winter supplies of gas. For additional information, see November 5, 2014, article - Europe Secures Winter Gas.

Earlier this week, Russia announced that it was scrapping the South Stream pipeline project, which would have bypassed Ukraine to supply natural gas to Europe. Visiting Turkey, Russian President Vladimir Putin blamed Bulgaria's reluctance to take part in the project as well as the EU's ongoing sanctions against Russia over its involvement in Ukraine's conflict with pro-Russia separatists. For additional information, see December 3, 2014, article - Russia Scraps South Stream Natural Gas Pipeline, Chooses New Route to Turkey.

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