BRUSSELS — Ukraine? is working to become an? energy? hub, producing its own gas, developing storage and importing from both the? European Union? and? Russia,? Ukraine's visiting? energy? minister said.
The? European Union? is pressing for agreements to be sealed with? Ukraine? by the end of this year as both parties seek to dilute? Russian dominance as a gas supplier.
But? Kiev? is torn between EU cooperation and? Russia's promise to cut its gas bills in return for control of its pipelines.
At the end of April,? Ukraine's government? asked parliament to lift a ban on the privatization of state? energy? firm? Naftogaz, which includes pipelines that pump Russian gas to? Europe. That could allow? Kiev? to sell or lease them to? Russia's gas export monopoly Gazprom.
Ukraine's? Energy? Minister? Eduard Stavytsky? and EU? Energy? Commissioner? Guenther Oettinger? raised the possibility of a three-way relationship at talks in Brussels on Friday.
"Ukraine? is really trying to consider its geopolitical situation and to establish a gas hub, so we will be able to do spot purchases in? central Europe," Stavytsky said.
Guenther Oettinger? said he believed EU firms were willing to buy into? Ukrainian? infrastructure. He did not name potential investors, but? energy? firms were at the closed-door talks, including ExxonMobil and? Royal Dutch Shell. None were immediately available to comment.
Stavytsky said $550 million was needed to modernize? Ukraine's infrastructure, of which? Naftogaz? could provide $240 million, while the rest would come from loans.
Since late last year, technology allowing pipeline flows to be reversed has allowed? Ukraine? to import some gas from EU nations, including? Hungary? and from Germany? via? Poland. In addition,? Slovakia? is seeking to develop reverse flow technology, with a test expected this month, Oettinger said.
As the? European Commission? seeks to expand its internal? energy? market, it has also been working to develop? Ukraine's extensive gas storage, which could ease any supply shortages.
Ukraine? already has storage of 31 billion cubic meters and Stavytsky said it was seeking to increase it to 50 bcm, compared with 95 bcm for the? European Union? as a whole.
In the past, gas flows to the? European Union? have been disrupted because of? Ukraine's quarrels with? Russia? over how much it has to pay for its supplies.
The? European Union? depends on? Russia? for about a quarter of its gas, more than 60 percent of which passes through? Ukraine.
All parties are seeking to broaden their options, and? Russia? has built pipelines to bypass? Ukraine.
It wants? Ukraine? to join its? Customs Union, while? Ukraine? and the? European Union? are debating a free trade and political association deal.
It could be signed later this year, but the? European Union? said it is conditional on improved human rights and addressing "politically motivated convictions," a reference to the jailing of former Prime Minister? Yulia Tymoshenko, President? Viktor Yanukovich's arch rival.