Ukraine and Poland ink gas pipeline deal

The Ukrainian prime minister announced a pipeline deal with neighboring Poland that diversifies the energy sector with better access to liquefied natural gas hubs. Ukrainian company Naftogaz signed a deal with its Polish counterparts, Gaz-System, to build a pipeline between the two countries. Ukrainian Prime Minister Arseniy Yatsenyuk said the deal ensures his country remains an important hub in the European energy market. It’s not a reverse pipeline, « but it means an access to gas from the LNG terminals that have already been built in [Lithuania] and Poland, » he said. The European market gets about a quarter of its gas needs met by Russia, though most of that runs through Soviet-era transit networks in Ukraine. Lingering contractual disputes between Kiev and Moscow, and more recent turmoil in eastern Ukraine, adds a layer of risk to conventional gas delivery options. European leaders are looking to bring natural gas from Azerbaijan through a network of pipelines in an effort to avoid geopolitically sensitive territory in Ukraine. Russian energy company Gazprom had pursued a rival project, South Stream, though that project was shelved as the Russian economy declined. Reforming the Ukrainian energy sector was among the conditions set by international lenders for assistance meant to prop up an economy left in shambles by political upheaval that began in late 2013. The Polish-Ukrainian pipeline should extend about 65 miles. A feasibility study should be completed during the first half of the year.