EU partners help Ukraine enhance energy security New arrangements between Naftogaz of Ukraine and the German RWE

will help divers ify gas supplies to the Ukrainian market and increase the government revenue fro m the storage of natural gas underground. According to Eduard Stavitskiy, Minister of Energy and Coal Industry of Ukraine, the Ukrainian state holding is expanding cooperation with RWE.The new agreement between the companies was signed on Sept. 5, he said. The minister wouldnt disclose the details because of confidentiality.However, he h as pointed out that pricing rates in the RWE contract are more beneficial for Uk rainian consumers than those incorporated in the 2009 agreement between Naftogaz and Russian Gazprom, even given the 100 USD discount received by Ukraine for le tting the Russian fleet station its ships in Crimea. The Naftogaz and the state budget revenues will benefit from the cooperation wit h RWE, as the number of commercial transactions between companies will go up.Also , Ukraine will cut down its gas import-related expenses, as the European supplie rs are cheaper than Gazprom. According to the State Statistics Service, in the first six months of 2013 the a verage price for the Russian gas was 421.4 USD per 1,000 cubic meters(purchased v olume 9.668 billion cubic meters), whereas the European gas was 392.74 USD per 1 ,000 cubic meters (purchased volume 660.652 million cubic meters). The updated Energy Strategy of Ukraine through 2030 approved by the government l ast month, includes plans to diversify gas supply and to create competitive cond itions on the domestic market.The experts of Ministry of Energy and Coal have poi nted out that it is important to improve the state energy security and to minimi ze the risks associated with working with a single supplier. The government has launched several projects with foreign partners to achieve th ese objectives.They imply supply of the European gas via existing infrastructure in the reverse direction (via Germany - Czech Republic - Slovakia or Turkey - Bu lgaria - Romania).The new terminal on the Black Sea coast is under construction w hich will receive tankers of liquefied natural gas from Egypt, Algeria, Qatar an d the Caspian region.Negotiations with Azerbaijan on construction of the "White S tream" gas pipeline to transport natural gas are also underway. All these projects will boost competition among suppliers on the Ukrainian gas m arket and reduce the price because of several traders.The EU consumers are going to benefit, too, and will be able to use the Ukrainian route to diversify gas su pplies for their own benefit. This will allow to bring in new transit gas flows and ensure active operation of the Ukrainian gas transportation infrastructure. The Ministry of Energy and Coal has estimated that, because of the diversified g as imports, the single source gas supply will not exceed 35% of its total consum ption, by 2030 - less than 35% of total gas imports. Given the significant potential of the Ukrainian GTS, the government intends to implement a set of measures to create on its basis a gas hub, which will play a key role in ensuring the stable operation of the European energy market. Ukrainian Prime Minister Mykola Azarov has instructed Vice Prime Minister Yuriy Boyko to submit proposals for upgrading Ukraines gas transportation system by t his November.It is expected that the document will be presented on the eve of the summit in Vilnius, where Ukraine plans to sign an Association Agreement with th e EU. OFFSET: No more than 35% of gas from a single source will be imported to Ukraine in 2030