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Brussels, 20 March 2009

High level Investment Conference on modernisation of Ukraine's gas transit system

On 23 March in Brussels, the EU and Ukraine will meet with International Financial Institutions (IFIs), EU Member States and other countries, and representatives from the gas industry to discuss the necessary steps for the modernisation of the Ukrainian gas transit system. Participants of the Joint EU-Ukraine International Investment Conference on the Rehabilitation of Ukraine's Gas Transit System: “EU-Ukraine: Partners for securing gas to Europe” will discuss the reforms needed to ensure the sustainability, reliability, efficiency and transparency of this infrastructure for the next decades. The Commission will be represented by President José Manuel Barroso and Commissioners for External Relations and Neighborhood Policy, Benita Ferrero-Waldner, and for Energy, Andris Piebalgs. On the Ukrainian side, President Viktor Yushenko and Prime Minister Yulia Timoshenko as well as a governmental delegation will participate. At the conference a Joint Declaration will be signed by the EU, Ukraine and the IFIs setting out the framework in which investments should take place.

Benita Ferrero-Waldner said: "The conference on Monday will take an important step forward in confirming the framework in which investment should flow in order to support Ukraine's Gas Transit System. On the Commission side, we stand ready to provide technical assistance to support the decisions taken at the conference. On the Ukrainian side, we will welcome the commitments on the reforms and increased transparency and we trust that they will be implemented as swiftly as possible"

Andris Piebalgs said: "This year's gas dispute between Ukraine and Russia has only reconfirmed the crucial role of Ukraine in the EU's energy security. It has also underlined very clearly the need for ensuring safe, transparent and reliable transit through Ukraine for the stable supply of gas to the EU".

Ukraine is a key transit country for oil and gas supplies from Russia to the EU and has expressed its wish to be integrated into the EU and South-Eastern European energy markets. Energy is a sector that will continue to be at the centre of EU-Ukraine relations and where co-operation will continue to grow substantially over the coming years. The gas transit system of Ukraine represents the backbone of gas supplies to Europe, accounting for 20% of the EU’s gas consumption and 80% of Russian gas exports to the EU, as well as carrying substantial quantities of Central Asian gas.

Anticipating the importance of this transit system for the EU’s growing demand for imported gas, the European Commission’s programme of technical assistance, INOGATE, carried out a number of studies between 2003 and 2007, which concluded that investments of €2.5 billion for 2009-2015 are required to rehabilitate the system in order to keep it operating at current volumes. The importance of this issue was explicitly recognised in the Memorandum of Understanding on co-operation in the field of energy between the EU and Ukraine signed on 1st December 2005 by President José Manuel Barroso, the President of the European Council at the time, UK Prime Minister Tony Blair, and Ukrainian President Victor Yushenko.

The Joint International Investment Conference on the Modernisation of Ukraine's Gas Transit System, to be held on 23rd March 2009 in Brussels, will provide an opportunity for all stakeholders to discuss the context in which the investments in Ukraine’s gas transit system will be made. The conference will be co-hosted by the European Commission and the Government of Ukraine and it will bring together over 200 representatives of the EU, Ukraine and third countries, as well international financial institutions and the private sector. In preparation for the Conference, the European Commission and the International Financial Institutions have identified a series of reforms that are necessary in Ukraine's gas sector to enhance its gas transit system stability, reliability and transparency and attract the necessary investment. These reforms include adopting the appropriate parts of the EU gas market acquis and ensuring independence of the Ukrainian gas transmission operator in terms of its legal form, organization, decision-making and accounts.


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