Open Season for compressor stations reconstruction – tactical task for maintaining of Ukrainian transit potential

19 September 2016, Kyiv – Mass media widely spread biased information about supposed connection between declared procurement of Ukrainian transmission system CS reconstruction works and latest changes to PJSC “UKRTRANSGAZ” charter.

Considering this, PJSC “UKRTRANSGAZ” focuses the attention of mass media:

1. Beginning of procurement of Ukrainian transmission system CS reconstruction works is one of subsequent stages, preceded by years of technical solutions development, their approval according to the set order (engineering stages: feasibility study, project, operational documentation).
2. Reconstruction activities for compressor stations of south transit corridor, which provides the supply of gas to Balkan region countries and Turkey, were included to financial plans, investment programs and annual procurement plans of PJSC “UKRTRANSGAZ” in 2011-2016 accordingly.
3. The need in south transit corridor CS reconstruction has been discussed at least from 2001. In 2014 said project were reanimated due to the urgent need to conduct real activities to strengthen Ukrainian transit potential, efficiency increase and with a goal of avoiding dependency from the supply of spare parts of Russian origin.
4. Open season procedure is conducted in public procurement system ProZorro with the publishing of announcement in English – international open season. Traditionally PJSC “UKRTRANSGAZ” is opened for transparent cooperation.

Substantially more.

Main gas transmission task is a reliable gas supply for consumers. Gas transportation in GTS system is made by compressor stations (CS). Most CS of PJSC “UKRTRANSGAZ” are operated for more than 25 years. In these station morally outdated and low efficient equipment from 1980’s. It includes gas pumping units (GPU), some of which had exhausted their service life, and utilized according to the settled regime only thanks to constantly increasing PJSC “UKRTRANSGAZ” expenses for additional maintenance and repairs.

There is an objective factor, that GTS in not loaded up to project capacity, so part of CS power is not utilized. But there are a number of crucial CS, which utilization is not sensitive to changes of transportation trough Ukraine, which is confirmed by relevant mathematical models for different workload scenarios - so called “crucial objects” of PJSC “UKRTRANSGAZ”. They are CS “Ananyiv”, CS “Pivdennobuzka”, and CS “Zadniprovska”, which operate at gas mains of south transit corridor and provide gas transit to Balkan region countries and Turkey. During peak workload, for example CS “Ananyiv” provides 20% more capacity for south transit corridor, that it was foreseen by project solution for this CS. This in turn leads to additional fuel expenses end negatively influences GPU condition.

These stations are equipped with GTN-16 and GTK-10 units, produced in times of Soviet Union at factories, situated now at Russian territory. They have low efficiency factor, which leads to the sufficient fuel gas expenses..

It is noticeable, that south corridor CS reconstruction issue, in particular CS “Ananyiv”, was understood from 1997 by previous generation of gas experts, when projects of south corridor capacity increase started to realize. Since that time many project works were conducted, which unfortunately, due the lack of money, absence of political will and constant intervention of financial-industry groups, were not realized, and technical documentation was left in archives. If reconstruction project for CS “Ananyiv” was completed, then starting from 2005 PJSC “UKRTRANSGAZ” could save more than 220 mcm of gas (about USD 54 mln.), which can be compared to the required investments for the reconstruction of this CS in 2016-2018.

This and other factors in 2014 made PJSC “UKRTRANSGAZ” to define the list of CS, which are subjects for reconstruction and technical re-equipment, taking into account foreseen scenarios of GTS operation. Following principles were used:

• Pragmatic choice of “crucial objects” and solutions for their technical re-equipment in conditions of changing transportation volumes;
• Efficiency increase by the decreasing of energy and maintenance costs;
• Ensuring of reliable operation of Ukrainian transportation corridors.
• a result, accounting the relevant orders of Ministry of Energy and Coal Industry of Ukraine and NJSC “Naftogaz of Ukraine”, mentioned CS list was included to the Plan of GTS development for 2016-2025, which was developed to fulfill the requirements of Ukrainian Law “On Natural Gas Market” and GTS Code and was approved by the decree of NERC as of 24.03.2016 №389. 
• reconstruction and re-equipment of 32 CS was included to the Plan of GTS development for 2016-2025,  from which in 2016-2018 will be fully realized reconstruction projects of CS “Bar” (Deutsche Bank), CS “Romny” (EBRD), CS “Ananyiv”, CS “Pivdennobuzka”, and CS “Zadniprovska” (own PJSC “UKRTRANSGAZ” funds).
•          accordance with government requirements, in case of reconstruction engineering of such potentially dangerous objects as mentioned CS, V class of complexity and CC3 class of consequences are defined, so three stages of engineering is mandatory (engineering stages: feasibility study, project, operational documentation).
•          feasibility study stage comparative technical-economic calculations are conducted with a goal to choose an optimal way of object reconstruction, considering not only the investments, but also operational period expenses, with simultaneous fulfillment of current Ukrainian industry safety standards. Technical-economical indictors of potential producers of main equipment are used for comparison. In FS for the reconstruction of CS “Ananyiv”, CS “Pivdennobuzka”, and CS “Zadniprovska”, developed in 2015, was used a comparative analysis of options for GPU from different producers: General Electric, Solar Turbines and PJSC «Sumske NVO» (with drive, produced by national science-production gas turbine construction complex «Zorya»-«Mashproekt», which is integrated to «Ukroboronprom»). By the results of FS most efficient options were chosen for each CS. Also single-type GPU produced by PJSC “Sumske NVO” were chosen as optimal, which is logical for a single transportation corridor. Another proof of optimal choice is a fact, that same GPU’s are in operation at CS “Tarutine” since 2001, which proved to be effective and reliable equipment.
• engineering stage (FS and Projects) has passed government expertise (government companies “UKRDERZHBUEXPERTISA” and “NDPIPROEKTREKOSTRUKTSIYA” Institute) and receiver positive expert decisions in 2015-2016.
•          is necessary to notice, that objects of procurement are CS reconstructions, which price includes construction works, equipment and other expenses. So expected cost must not be evaluated only as a cost of GPU produced by “Sumske NVO”. In truth, for the expected cost of UAH 4,119 billion PJSC “UKRTRANSGAZ” plans to get reconstructed CS “Ananyiv”, CS “Pivdennobuzka”, and CS “Zadniprovska” with technical-economical parameters, allowing to achieve annual fuel gas saving up to 110 mcm.