Ukraine and Poland must overcome seven barriers by 2023 to integrate gas markets – USAID report

March 31 – Ukrainian and Polish gas markets have significant potential for further integration based on the best EU experience. This is stated in the USAID expert report on the results of the study “Strengthening the integration of the Ukrainian and Polish gas transportation systems and the gas market”.

It was important for us to see the conclusions of international experts regarding the possible steps, thanks to which the Polish-Ukrainian gas hub can become a reality. Last year, we demonstrated the potential to increase gas trade volumes between the two countries. Already today, Ukraine could receive from Poland 5 billion cubic meters of gas per year, including from the LNG terminal, if Poland would ensure the availability of guaranteed capacities towards Ukraine and the required level of pressure”, – stressed Sergiy Makogon.

To reveal all the possibilities of both parties, the experts analyzed the current level of integration in the context of technical, commercial, as well as legal and regulatory factors both in Poland and in Ukraine. Taking into account market forecasts and future challenges, including those associated with changes in the transit of Russian gas to Europe, a number of obstacles were identified, but all of them could well be eliminated by 2023:

  1. Creation of firm capacity at the point of interstate connection between Ukraine and Poland.
  2. Simplification of the licensing regime in Poland for Ukrainian companies.
  3. Permission to use Ukrainian gas storage facilities for the storage of a mandatory reserve provided for by Polish law.
  4. Creation of a complete product for capacities at the point of interstate connection between two GTSO.
  5. Creation of a separate regulatory regime (reasonable tariff and simple requirements for Ukrainian traders) for transit from Germany and / or LNG installations at the Ukrainian border.
  6. Creation of a full-fledged gas exchange in Ukraine.
  7. Creation of a short-term product from the Polish side to establish a reduced transportation tariff for the targeted use of Ukrainian gas storage facilities to increase the use of UGS facilities.

Experts predict that regional gas demand will grow due to the use of gas in the energy sector instead of coal, especially in Poland. Particular attention in the report is paid to the issue of diversification of sources, including through transportation from LNG terminals, as part of the implementation of energy security programs of both countries.

The ways of providing affordable and reliable sources of natural gas and the further development of the gas markets of both countries directly depend on the creation of firm capacities between Poland and Ukraine. Currently, the possibilities of Network Users remain limited. In the future, given Poland’s planned refusal to transit Russian gas from 2023, the situation may worsen. The ability of Network Users to transport gas from Poland to Ukraine and plan activities for subsequent periods will be questioned.

According to the USAID report, both sides have the necessary prerequisites for the implementation of expert recommendations until 2023 and the subsequent integration of the Ukrainian and Polish gas markets.