Modernization of Ukrainian gas transportation system must be held with maximum advantage for Ukraine. Everybody has been saying this for quite a while, but all experts and politicians agree that our country cannot manage such expensive project by itself.

Discussing the question whom to invite for help, the opinions divided. Ones say Gazprom is the best partner, the others prefer the EU, while the thirds stand for three-parted consortium among Ukraine, Russia and the West.

Recently the media reported that at the end of February, the Energy and Coal Industry Ministry jointly with Naftogaz of Ukraine held negotiations with German AEG about supply and promotion in attraction of EUR 400 million, seeking possibility to start modernization of its gas transportation system (GTS) without participation of Russian Gazprom.

As German corporation AEG Industrial Engineering CEO Heinrich Otterpohl has said, the Ukrainian power approached his company proposing to engage in modernization of gas compressor stations. February 27, Otterpohl met with Ukrainian Energy Minister Yuriy Boiko, representatives of NJSC Naftogaz of Ukraine and two German banks in order to discuss details of an agreement. The Head of the German corporation refused to inform about details of the meeting, referring to an agreement with the Ukrainian government not to disclose information about the course of negotiations.

The source in Naftogaz informed that participating in negotiations were Deutsche Bank and Landesbank, which proposed to finance re-equipment of compressor gas pumping stations in case that it is done by AEG company. The matter concerns allocation of a credit to the amount of EUR 400 million.

The situation has not been officially commented in both banks.

Whether the modernization of Ukrainian GTS is possible without Gazprom, but with participation of only Germany, for example, ForUm has asked experts:

Yuri Poluneyev, MP from Party of Regions, president's aid:

- I can tell you that the idea of modernization of Ukrainian GTS with participation of Western capital exists from mid 90-ies. The European Bank for Reconstruction and Development supports this kind of project. Once EBRD was considering a creation of consortium with participation of Russia, Ukraine, European and even American companies for modernization of GTS. Such initiative has right to exists from the economic point of view.

But here the political constituent comes. For today Ukrainian GST is filled with Russian gas and consumer is Western Europe. Hence, it would be rather difficult to hold modernization of GST without Russian part. I believe that the three-partied consortium is an optimal variant.

Bogdan Sokolovski, expert:

- I am very positive about it. I don't know the details of the negotiations, but the whole thing can be considered a practical addition to the declaration signed in 2009 with European Commission and financial institutions of Europe.

Ukraine needs modernized GTS in any case, and it does not matter if we transit Russian gas or any other country gas. The goal is to modernize the system. And to do so we need means - credits of international financial institutions and experience of Western companies. I am not surprised that it is German company to hold talks with Ukraine despite the fact that this country promotes interests of Gazprom in Western Europe. Germany is very democratic country, which acts as it sees fit. Government's influence on business is minimal there.

Whether Russia will obstruct this project? Russia is a leading player at the energy market and it is a huge country. Ukraine always irritates Russia irrespective of the president in charge - Kravchuk, Kuchma, Yushchenko or Yanukovych - just because they are presidents of the state, which the Kremlin does not want to see as an independent subject of international relations.

Valentyn Zemlyanski, expert:

- It is unreal to modernize GTS without Russia. Modernization of GTS must be held for a certain project. In our case it is transit of Russian gas via Ukraine's territory.

If Gazprom guarantees transit by Ukrainian GTS instead of North and South streams projects we will be able to prove to European investors there are solid grounds to invest into Ukrainian GTS. It is important to prove seriousness of our intentions.

Gennady Ryabtsev, vice president of scientific center "Psyche":

- As far as I know there are not agreements on modernization of Ukrainian GTS.
European structures, including EBRD refuse to talk about modernization until Naftogaz is reformed as a complex. The second requirement is audit and estimation of the GTS itself. And only then the matter will concern the modernization of GTS.

There are many agreements made, and many to come, but they all concern security and functioning of gas transit stations and have nothing to do with modernization.

Minimal term of the estimation process of Ukrainian GTS is six month, everything will depend on resources and methods, but the starting time of this very estimation is still unknown.
Volodymyr Ohryzko, former Foreign Minister of Ukraine:

- I am not a big specialist in reconstruction of any gas transportation system, but the very fact that such consultations have started means about right approach, called "diversification of gas supply sources." If real steps follow the talking I believe such cooperation may become very useful and important.

European norms say that none of the countries should depend on one source of energy more than by 30%. And if we really want to become a member of the EU we cannot depend by 90% on Russian gas.

I welcome such step. There is enough gas at the world's market, the question is how to get it and deliver to Ukraine.

I also believe that Moscow's horror stories on that our GST will not be needed when they build passing-by pipelines will in the end turn out to be just a waste of money.

In fact, we can modernize GTS on our own. I oppose any kind of consortium on managing the GTS. I am convinced our specialists have enough experience, knowledge and skills to be the master in own house. But if cooperation with Europe allows speeding up the process, why not unite the efforts.

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