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, %)|