The new Gas TSO of Ukraine - The first results and the future challenges of Sergii MAKOGON CEO of Gas TSO of Ukraine, LLC
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The first results and the future challenges of
the new Gas TSO of Ukraine
Sergii MAKOGON 25 February 2020
CEO of Gas TSO of Ukraine, LLC Ukrainian Energy Forum
New Gas TSO of Ukraine
Headcount of 11,100 FTE, incl. all key staff related to transmission
function and equipped with required licenses & permits
UAH 3.8 bln of TSO-owned assets, incl. IT soft- & hardware,
tools & equipment, transport etc.
Unblocked interconnectors made it possible to arrange the backhaul
operations and deliver new shor-thaul service
Independent IT-environment and infrastructure, incl. go-live daily
balancing platform, ERP and dispatching
~550 contracts concluded
TSO/SSO inter-operator agreement
TSO license and tariff
2New Transit Deal
Gas war didn’t occur.
The Gas Deal is an acceptable compromise: Documents signed:
1. Interconnection agreement with
booked capacities: 65 bcm/year for 2020 Gazprom
and 40 bcm/year for 2021-2024
2. Agreement on organization of
transit between Naftogaz and
ship-or-pay clause Gazprom
guaranteed transit revenues of about $7 bn 3. Interconnection agreements
with neighboring TSO’s of Poland,
flows measurement and commercial Hungary, Slovakia, Romania and
Moldova
operations in energy units
65
7
bcm 40 40 40 40 bn
~$
bcm bcm bcm bcm
2020 2021 2022 2023 2024
3TSO Strategy: Vision, Mission and Values
Vision Mission
To be a modern and innovative gas To ensure the development of the competitive,
transmission system operator within the transparent and non-discriminatory gas
integrated European gas network market and to secure reliable gas flows for
Ukrainian and European consumers in the most
sustainable way
Reliable provision of gas transmission Sufficient and diversified capacity
services in a transparent, non- for gas transmission to Ukrainian
discriminatory and sustainable way and European consumers to ensure
at fair price Efficiency & Security energy security and uninterrupted
Reliability of supply supply in any circumstances
Values
Support of development of non- Market
discriminatory, competitive, impact Integrity Independence, fairness and
transparent and liquid natural transparency of the operator
gas market aimed at ensuring ensuring customer and market
fair gas pricing for consumers in trust
Ukraine Responsibility
High standards of social and
ecological responsibility
4TSO Strategy: key initiatives
1. To optimize and modernize the GTS 2. To become a model for corporate governance
infrastructure and social responsibility in Ukraine
Implementation of the GTS capacity 2.1 Introduction of OECD principles of corporate
1.1 optimization plan governance and internal controls at SOEs at the TSO
Digitalization and automation based 2.2
1.2 Development of CSR key focus and strategy
on Industry 4.0 principles while
ensuring high level of cyber security
2.3 Ensuring high level of transparency and market trust
1.3 Operational efficiency improvement
3. To promote development of a 4. To actively pursue transformation
transparent and liquid natural gas market opportunities and contribute to green energy
integrated in EU energy market transition in Ukraine
3.1 Full implementation of EU market rules 4.1 Promotion of CNG usage as transition motor fuel
3.2 Development of new services Contributing to decarbonization of
4.2
Ukrainian economy
3.3 Development of a gas trading hub in Ukraine
510-Year Network Development Plan (TYNDP)
Estimated CAPEX for 2020-2029, UAH bln excl. VAT
TYNDP 2020-2029 summary
10.1
9.6 0.6
0.6
1.3
0.8
0.5 0.7 UAH 38.8
bln
6.3
5.1
5.9
0.6
0.5
Ø UAH 4 7.8 6.6
7.5
bln / year 1.0
2.7
0.5 1.9
1.5 0.8 0.7 20.0
3.0
0.6
0.3 0.0 0.5
1.3
0.7 0.6
0.0 0.2
2020 2021 2022 2023 2024 2025-2029
yearly average 10Y total:
CS Pipelines GDS Other
610-Year Network Development Plan (TYNDP)
Estimated CAPEX for 2020-2029, UAH bln excl. VAT
Compressor Stations (CS) reconstructions budget
CS Yagotyn 2.2
2.3 CS Berdychiv
CS Oleksandrivka 1.6
2.0 CS Bar
CS Dykanka 2.5
2.3 CS Krasyliv
1.0 CS Komarno
2.3 CS Dolyna-2
2.5 CS Uzghorod
1.6 CS Bogorodychany
7GTS optimization and operational efficiency
Strategic objective: To optimize and modernize the GTS infrastructure to reflect market conditions while
ensuring reliable and efficient operations
Underutilized
Historically, Ukrainian GTS was able to transmit ca.190 bcm (domestic and transit) but for the last
few years it was structurally underutilized due to rerouting of transit volumes
Number of the operational CS
by transit scenario, units
Oversized Total CS = 86
Taking into consideration market environment and low prospect of significant transmission volume
growth Ukrainian GTS is highly oversized
Underinvested 58
At the same time system is underinvested: execution of investment plans submitted to the 71 69
Regulator in 2017 was 35%, in 2018 – 32%. Moreover, 2019 investment programs were not
approved by the Regulator which prevents the TSO from making any investments. As of the time of
strategy preparation investment program for 2020 is under NEURC review.
Inefficient spending
As a result TSO incurs significant costs of maintenance of infrastructure that is not used in gas 28
transmission 15 17
70% of CS have to be decommissioned 0 bcm 30 bcm 70 bcm
Uncertainty regarding transit did not allow to start decommissioning of compressor stations that Not in operation In operation
do not take part in gas transportation. About 70 Compressor Station (CS) yards would not be
operational in case of “0” transit, most of them would have to be decommissioned
8Key challenges
Unauthorized offtakes
Preparation for the PSO cancellations
Opening of the retail market
Absence of a gas insurance stock
Gas exchange trading
9Ukrainian Energy Forum 2020
Thank you!
Sergii MAKOGON
CEO of Gas TSO of Ukraine, LLC
makogon-sl@tsoua.com
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