Ukraine plans to create a gas hub to keep energy exports from being used as a political pressure tool. The project was discussed during a meeting of the presidents of Ukraine and Slovakia, Petro Poroshenko’s spokesperson Sviatoslav Tseholko told the press. To ensure the reliability of reverse gas flows, the two sides have agreed to establish a working group to design the system of interconnectors, that is, connecting pipelines. No other specifics have been made available so far. Is now the right time for the emergence of such a gas exchange in this country? What obstacles may we encounter in creating it? The Day presented these questions to president of the Strategy XXI Center for Global Research Mykhailo HONCHAR:
“The idea is a right one, because a gas storage system sitting on the EU’s border and having capacity to store over 30 billion cubic meters of gas at any time and a prospect of capacity increase to 50 to 55 billion cubic meters is very attractive for European gas traders. What are the benefits of it for them? They will be able to use these facilities to reduce the seasonal price fluctuations in spot gas trading in Europe. However, creating a gas hub requires more than just choosing some point on the map where the gas flows intersect or a large storage facility is located. Its success is linked to implementing reforms in the domestic market first. Even some developed countries have failed at it, because it is not just about the technical potential, but also about potential users trusting the state that creates an exchange. For example, we have the Central European gas hub in Austria, quite close to our borders. Despite the fact that it has been in operation for nearly eight years, it is considered only moderately developed in Europe. Moreover, we should not forget that Slovakia also has its own project aiming to establish a gas hub in Velke Kapusany, just across its border with Ukraine. The gas corridor East-West is already functioning, and the Slovaks are just waiting for the corridor North-South to be commissioned. That latter corridor is a project of the Visegrad Four and its neighbors, which envisages the creation of a number of interconnectors linking existing pipelines in the EU, which will enable the flow of gas from the north (the LNG terminal in Poland) to Slovakia, the Czech Republic, Hungary, and from the south (the Croatian terminal in the island of Krk) to Hungary and Slovakia. The emergence of the Slovak hub has to make the Ukrainian authorities to think already about the competitive advantages of its gas exchange. In this case, no investors will be lured by underground gas storage facilities alone. The main advantages have to be transparency and efficiency of this exchange. Without them, the gas hub project will be a stillborn one.”
