BALKAN GASTRANSIT PROJECT

Location:

Ukraine

Project number:

5836

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

19 Oct 1999

Status:

Complete

PSD disclosed:

03 Aug 2001

Project Description

This project proposes to reduce the bottleneck in the Ukrainian gas transportation system through the construction of 70 km of looping (parallel) pipelines in the south-western part of the Ukraine.
The project aims to reduce the bottleneck in the Ukrainian gas transportation system and increase supply, especially in winter periods, to Turkey, Bulgaria, Romania, FYR Macedonia and Greece.

Transition Impact

  • Strong demonstration effect of the first pipeline owned by a joint venture in the Ukraine. Current Ukrainian legislation prevents the privatisation of all or part of the pipeline network. Gastransit is the only project, which has a track record of attracting foreign investments in improvements in Ukraine's gas transport infrastructure.
 
  • Cash generation effect, since the sponsors will aim to recoup their investments and repay the loan from proceeds derived from cash transit fees. This will earn foreign currency to all the sponsors. Traditionally, payment for transit of gas was often made in the form of gas deliveries (barter). At the same time, this will enhance transparency, since tariff calculation will be based on a transparent formula that will contractually defined.
 
  • Demonstration effect of successful pipeline co-operation, benefiting the transit country in terms of transit fees, the gas purchaser and supplier. At the same time, this can have positive regional effects due to closer integration with gas pipeline improvements in Romania and Bulgaria.

The Client

Gastransit was set-up as a joint venture between Naftogas Ukraine, Gazprom, Turusgaz (owned by Botas, Gazprom and Enka) and Transbalkan (a consortium of four Turkish construction companies) to undertake works relating to the upgrading of the Ananiev-Izmail gas pipeline. The Bank has an existing facility of US$ 40 million (co-financed with Black Sea Trade & Development Bank for an additional US$ 12 million) to finance Phase I – the construction of a compressor station in Tarutino.

EBRD Finance

Long-term loan of up to US$ 97 million (€112 million) to finance construction expenditure of 70 km of parallel pipelines. There are also potential co-financing opportunities to commercial banks.

Project Cost

Up to US$ 118 Million (€135 million).

Environmental Impact

The project was screened as B/1 requiring an environmental audit of the existing infrastructure and an environmental analysis of the proposed new development. The new gas pipeline will run in parallel to the existing one and will utiliseutiliseize the existing infrastructure including the existing road. The requested studies were carried out by independent environmental consultants as part of the Engineering / Environmental Study. The studies did not identify any significant environmental issues along most of the proposed pipeline routing. A short section of the pipeline is running in the vicinity of a wetland area classified as a Ramsar site. The above issue was thoroughly investigated. The investigations showed that the proposed pipeline will not cross Ramsar sites but will go between two Ramsar sites along the line of the existing pipeline at least 1 km from the edge of any of the sites. The project complied with the notification procedures under the Ramsar Convention. A protocol was signed between Ukraine, Romania and Russia relating to the construction of the pipeline. According to the protocol each party informed their relevant authorities about the project and agreed the pipeline route with them. In addition, public consultations were carried out by the company in accordance with Ukrainian requirements. This included notifications in the newspapers, presentations in the media, meetings and negotiations with landowners. Gastransit has issued several announcements in newspapers and presented the project in the radio and at several conferences.
 
 
The proposed project has been structured to meet the relevant Ukrainian and European Union environmental standards. The pipeline will have a cathodic protection system, special provisions to ensure safe operation as well as fibre optic cable control systems to control valve actuation, fire protection, etc. As the pipeline route will go through the existing pipeline corridor and will use the existing infrastructure, possible construction impacts are not considered to be significant and will mainly be related to temporary damage to land, increased dust emissions, noise, waste generation, health and safety issues and disturbance to flora and fauna. All these impacts will be mitigated through strict adherence to construction regulations and an Environmental Action Plan, which will be an integral part of the legal agreements. The potential impacts during the pipeline operation are considered to be minimal and will be mitigated through using adequate design and preventive measures. A detailed environmental monitoring plan will be prepared to ensure continuous control during operations. An emergency response plan will also be prepared and adopted prior to the commissioning of the pipeline.
 

Technical Cooperation

None.

Company Contact

 
 

Business opportunities

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