French gas company enters former Soviet space

French energy company ENGIE said Friday it’s now the first European player to have a framework to do work in a Ukrainian gas system overshadowed by Russia.

In the presence of French Finance Minister Michel Sapin and Ukrainian Prime Minister Volodymyr Hroisman, the French company, formerly known as GDF Suez, said it signed a framework agreement to reserve space in the Ukrainian gas transport and storage system in a deal with Ukrainian company UkrTransGaz.

By creating a Ukrainian subsidiary, Edouard Neviaski, who manages ENGIE’s global energy management business, said the French company is taking its first position as a European gas transit company.

“By creating this subsidiary in Ukraine and signing the agreement with UkrTransGaz, ENGIE is showing that it is a long-term partner of the Ukrainian economy,” he said in a statement.

Last year, the French company became one of Ukraine’s premier suppliers by committing to send significant volumes of natural gas to state-owned Naftogaz.

Ukraine’s is the largest gas market in the former Soviet-sphere. Europe gets about a quarter of its gas needs met by Russia and most of that runs through Eastern European pipelines. Energy security policies in the European Union are aimed in part at averting a repeat of disputes that prompted Russian gas exporter Gazprom to cut supplies through Ukraine in 2006 and 2009, leading to winter shortages across Europe.

Ukraine aligned itself with European energy interests in 2010 as Kiev pivoted toward the West. The rebel-held territory in the eastern Ukrainian republic of Donetsk was the scene of heavy fighting in 2014 as Ukraine was upended by political turmoil that followed a bid to align more closely with the European Union.

Three natural gas pipelines in Donetsk were damaged by artillery fire in August.

ENGIE is a partner with Russian energy company Gazprom at its Nord Streampipeline system that sends natural gas through the Baltic Sea to Germany. An expansion of that project has been met with concern by an EU wary of Russia’s grip on the regional energy sector.


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