Transit Infrastructure Law A Long-Term Play

BMI View:  A new law approving the leasing of Ukrainian gas transit infrastructure to European and American companies will boost security of supply for Ukraine and the EU. However, this will be a long-term process due to the need to renegotiate gas contracts, meaning Russia will retain its trade leverage over Ukraine for the time being.

The Ukrainian parliament has approved a law allowing the leasing of its gas transit pipelines. Naftogaz will retain a 51% share in Ukraine's transit assets, though will open the remaining 49% to US and European companies. Despite this development, we see little short-term change in energy trade dynamics, though the law could improve security of supply for all parties if supply contracts can be amicably renegotiated.

Benefits For Europe

Greater Control Over Dependency
Country-By-Country Gas Consumption, Russian Imports & Dependency 2012 (bcm, %)

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This article is tagged to:
Sector: Country Risk, Oil & Gas, Infrastructure
Geography: Ukraine, Russia

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