Operative information

(16.10.2000)

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I.A. Gordienko

V.M. Kolomeyev

A.F. Frolov

Current state of natural gas

From time to time in several press media organs ("Energobiznes" journal (Energy Business), "Toplyvo + Energetyka" (Fuel + Energy Industry)) and Ukrainian government agencies an issue on quality and quantity accounting of the natural gas-in-transit flow from the Russian Federation to foreign countries across Ukraine is addressed. Also, the issue on accounting of gas stored in underground gas storage facilities (GSF) is addressed too.

Virtually those, who have ever tried to throw light upon these issues so far, did not have a clear image of the Ukrtransgas gas transmission system and the natural gas receipt procedure. And so, in most cases information provided by them was neither accurate nor adequate and made the mainstream citizen to think about a possible gas flow manipulation and thus negatively affected both the Company's and State's images.

In this connection, we would give a qualified opinion on the background and current state of gas measurement procedures and accounting at enterprises affiliated with Ukrtransgas.

1. Underground gas storage facility (UGSF). Gas transmission unit for shaving of gas consumption peaks, formation of gas reserves for strategic and routine purposes. A UGSF is a complex geotechnological facility comprised of processing equipment set, wells, gas-compressor units, gas preparation facilities, technological gas pipelines, and gas metering points.

2. Receiving/delivering point. Point, where, in fact, the procedure of receiving natural gas subject to its quality and quantity is performed.

Gas receiving/delivering points are subdivided into:

• Gas flow metering points (GFMP). Facilities at a main gas pipeline for gas flow measurement. A GFMP is comprised of measurement pipelines, gas parameter measuring devices or gas meters.

• Gas metering station (GMS) means a gas transmission system unit designed for instrumental measurement of flow and quality of gas, which are commonly built at main gas pipelines (MGP) right by the frontier between gas transport companies. A GMS can include one or more GFMSs and a chemical-and-analysis laboratory.

Ukraine receives gas at 10 GMSs and 2 GFMPs from Russia and Belarus and delivers gas at 9 GMSs and 1 GFMP.

3. Gas pressure reducing station (GPRS). Gas transmission system unit for pressure reducing, purification, odorization, and accounting of natural gas prior to its delivery to the consumer.

Additional data on some specific parameters of the Ukrtransgas gas transmission system (GTS) as of 01/01/2000 are given in Table 1:

Features of Ukrtransgas gas transmission system (GTS)

Along with establishment of national frontiers - de jure, in the beginning of 1992, re-division of the gas transmission system of the former USSR on frontiers of newly established independent states began. The area of responsibility of the Ukrgazprom (afterwards transformed into the JSC "Ukrgazprom") was limited to the territory of Ukraine. This division was completed by the middle of 1992; however, so far, unresolved problems related to it has yet remained. This is due to the fact that boundaries of territories served by different enterprises of the USSR Mingazprom (Ministry of Gas Industry) and administrative borders of republics and regions were not the same. So, several Ukrtransgas Gas Pipeline Divisions were located in Russian regions and Moldova. At the same time, two subsidiaries of the Mostransgas (Russia) were located in the Luhansk region, Ukraine.

Thus, after the partition of the USSR' property it was found that all GMSs and GFMPs through which the Russian Gazprom began to deliver gas to the Ukrgazprom are located at a far distance from the Ukrainian border. In addition, the operational status and level of equipment at those GMSs did not meet relevant requirements applicable to the frontier gas receiving center, needless to say about the current European level, since as of the partition, all these GMSs served as inland not border ones. The Kursk GMS, which initially was within the Kharkivtransgas and served technological needs of the Ukrgazprom, has become the largest border gas measurement station in Europe, while it is located 82 km from the Ukrainian border. Along its length, this pipeline's section is equipped with tap valve points having stop valves; and particular gas pipelines also have branch pipelines delivering gas to Russian consumers. Another illustration: the Ostrogozk GMS (based in the Voronezh region, Russia) is located 115 km from the Russian-Ukrainian border.

The situation with respect of points of gas transmission to West and Central European and Balkan countries was hardly better. The main volume of Russian gas-in-transit flow to European countries (Slovakia, Czech Republic, Germany, France, and Austria) was delivered across Ukraine to the Slovakia-based Velke Kapushany GMS. Delivery of the whole volume of gas to Moldovian consumers including its transportation across the territory of Moldova was performed subject to measurements of Moldovian consumers, since Moldova was included in the balance sheet of the an Ukrtransgas. At that time, only two border GMSs operated within the Ukrgazprom - the Berehove GMS (gas transmission to Hungary) and Drozdovychi GMS (gas transmission to Poland). After the collapse of the USSR, Russia has become the successor with respect of long-term supply contracts.

Ukrgazprom has become a transporter of Russian gas-in-transit from the Eastern border of Ukraine to its Western one. After transportation of the Russian gas across the territory of Ukraine, the Ukrtransgas even up to date both de facto and de jure delivers the whole gas-in-transit volume to Russian Gazprom agencies rather than foreign gas transportation companies. Such a tricky situation could be observed on the border of Ukraine as of the beginning of 1992.

Back during first negotiations between Ukrgazprom and Gazprom management, a draft schedule for construction of new and technical renovation of existing GMS - both Russian and Ukrainian ones, planned to be equipped with up-to-date electronic gas meters - was made up. In the USSR Mingazprom era, all border GMSs (based in Russia, Belarus, Ukraine, and Romania) were equipped with mechanical gas flow registration devices with the total error of 3-5%. So, since 1992, the JSC "Ukrgazprom" has purchased automatic microprocessor-based gas meters "Superflo-IIE" complete with sensors of gas pressure gradient (class 0.25) and temperature (class 0.5) has begun to install them at Ukrainian border GMSs. The total error of this unit constituted 0.5 percent that enabled to increase the accuracy of gas flow measurement by a factor of 10.

Simultaneously, at request of the JSC "Ukrgazprom," replacement of outdated gas meters installed at Russian Gazprom gas measurement stations located on Ukrainian-Russian and Ukrainian-Belarusian borders with similar automatic gas meters began.

Within the period from 1992 to 1994, at all GMSs located on Ukrainian-Russian and Ukrainian-Belarusian borders outdated gas meters were replaced with new high-accuracy ones. That re-equipment has had a positive effect on the quality of gas flow accounting.

In March 1993, the Gazprom placed into commission the first GMS. It was the Prokhorivka GMS (located in the Rostov-upon-Don region (Russia), 5 km from the Ukrainian-Russian border) at the Northern Caucasus - Center gas pipeline.

In 1994, the JSC "Ukrgazprom" in collaboration with specialists from the German company "Ruhrgas AG" performed renovation and replaced outdated measurement devices designed for measuring gas quality and quantity with up-to-date automatic ones at the Drozdovychi GMS (Ukraine), through which gas is transmitted to Poland.

In 1995, the Ukrgazprom performed renovation of the Uzhgorod GMS alone and put it into commission. This station has replaced the Velke Kapusany GMS. So, since October 1, 1995, at its own GMS, the Ukrgazprom has performed measurement of the largest gas-in-transit flow to Europe.

In 1996, the Ukrgazprom built and put into commission the Oleksiyivka reversing GMS (receipt and delivery of gas toward Moldova, Ananyiv-Chernivtsi-Bohorodchany pipeline). Thus it was the initial step toward establishment of a civilized manner of gas transportation between Moldova and Ukraine. Approximately 20 Moldovian GPRSs that consume gas from the above mentioned pipeline were excluded from the balance of accounts, under which payments between Ukraine and Moldova are calculated.

Another step in the same direction was completion of the Orlovka GMS (Ukraine) in December 1997 (approximate cost: USD 5 million), which replaced the Isakcha GMS (Romania). Through this station Russian gas is delivered to Romania, Bulgaria, and Turkey. On the basis of results of measurements at that station, a joint balance of accounts with respect of gas-in-transit flow across Moldova and gas consumption on that territory is drawn up. At the Orlovka GMS, a great number of new constructive decisions were implemented as well as high-accuracy methods for measurement of gas quality and quantity. This station is considered the best Ukrgazprom GMS, through which gas is transmitted to Balkan countries up to this date.

Putting of the Orlovka GMS into service means, in addition to completion of the stage of legal completion of the Ukrgazprom's right to perform measuring of quality and quantity of gas flow across the Ukrainian territory, the beginning of installation at all GMSs of up-to-date transducers (class 0.1) and automatic devices designed for measurement of gas quantitative characteristics (chromatographs and water-holdup meters).

Funds invested by the JSC "Ukrgazprom" in construction and renovation of Ukrainian border GMSs are given in Table 2.

Cost of construction and renovation of Ukrainian border GMSs

The current procedure for delivery and receipt of gas between of Ukraine and Moldova is fairly complicated due to the fact that main gas pipelines - Ananyiv-Tyraspil-Izmayil (ATI), Shebelynka-Dnipropetrovsk-Kryvyi Rig-Izmayil (ShDKRI), Riasnopil-Izmail (RI) through which Russian gas in transit is imported to Balkan countries - crosses the Ukrainian-Moldovian border five times. In addition, Ananyiv and Riasnopol GMSs, through which Ukraine delivers gas-in-transit to Moldova, are located 70 km and 120 km from the border respectively. At that section, there are 34 Ukrainian GPRSs. All GPRS, included in the gas balance with respect of Moldova and Ukraine, are equipped with automatic gas meters. At present, the Hrebenyky GMS is being built by the very Ukrainian-Moldavian border (where gas transmission pipelines first cross the Moldavian border) and that would enable to exclude 34 GPRSs and two compressor stations belonging to Ukraine from the gas balance. Moldova has an intention to build the Kaushany GMS at the place, where gas transmission pipelines first cross the Ukrainian border that would enable to exclude 10 GPRSs and one compressor station belonging to Moldova from the gas balance. The next step should be 'cutting' all branch gas pipelines transporting gas to Moldova and 'adding' them to the RI pipeline and building a GMS at the place, where the pipeline crosses the Ukrainian border from the Moldovian side the last time (after the compressor station Vulkaneshty); while branch gas pipelines transporting gas to Ukraine -- after the GMS Kaushany -- should be 'cut' and 'added' to the SDKRI gas pipeline.

Within the same period (1992-2000), the Russian Gazprom completed construction and put into service: in 1999, the Serebryanka GMS, close to Ukrainian border -- where the pipeline transporting gas to the Northern Caucasus first crosses the Ukrainian border; in 1998, the Valuiki GMS - at the Ostrogozk-Shebelynka pipeline; in 1997, the Mozyr GMS in collaboration with Belarus - at the Torzhok-Dolyna pipeline. In March 2000, the largest border gas metering station the (800 m off the Russian border) - Sudzha GMS - was put into service in vice of the Kursk GMS. By Gazprom's estimations, approximate cost of the construction totaled USD 15 million. GMS Pysarevka (at the Petrovsk-Novopskov and Urengoi-Novopskov pipelines) and the Sokhranovka GMS (at the Orenburgh-Novopskov and "Soyuz" pipelines) are being putting into service this year. All GMSs were constructed and equipped under contracts with the Italian company Nuovo-Pignone with the use of high-precision automatic devices for gas flow measuring based on the differential pressure method.

Every year, Derzhstandart (State Standard Committee) regional offices of Ukraine, Belarus, Moldova, and Russia certify of all border GMSs and GFMPs. Notably, in 1996, representatives of the Ukrainian Derzhstandard on the invitation of JSC "Ukrgazprom" inspected Kursk GMS on-the-spot. On the basis of results of that inspection, there was made a conclusion that the station complied with all requirements specified in effective normative documents.

Thus, Ukrtransgas has been created an instrumental controlling system for monitoring gas received from Russia and an instrumental control over delivery of in-transit gas to other countries. Also, there exists a double system designed for monitoring of gas coming into Ukrtransgas pipelines and control over its delivery to consumers.

The Ukrtransgas gas transmission network is divided into the following 6 agencies - Regional Gas Pipeline Divisions (RGPD):

• RGPD "Donbastransgas"
• RGPD "Kharkivtransgas"
• RGPD "Cherkasytransgas"
• RGPD "Kyivtransgas"
• RGPD "Lvivtransgas"
• RGPD "Prykarpattyatransgas"

These divisions have GFMP for delivery as internal consumers so another Division. On the basis of these daily instrumental measurements, each RGPD makes up a balance of gas incomes into the system and its delivery to consumers. A similar balance is made up by Ukrtransgas. At the end of each month, adjusted monthly balances of gas (including gas used for company's own needs) are made up on the basis of said daily balances. Notably, routine daily balances and adjusted monthly ones have a discrepancy not greater than 0.5 percent on average. It just supports the fact of existence of quite accurate measurements of gas upon its incoming the gas pipeline system as well as upon its delivery to consumers and to Russia.

In fact, gas is receipted/delivered in accordance with the procedure set forth in the "Technical Agreement: to the Contract:" Every year, upon making contracts on gas delivery to Ukraine and the contract on Russian gas transit across Ukraine, the organization entitled to conclude such contracts with the Gazprom (RF) also signs with the Gazprom the "Technical Agreement," in which all actions to be taken by the Parties thereto upon the receipt of gas are specified. A GMS owner provides to the Counteragent's permanent representative hourly printouts containing measurements of electronic gas meters and a mandatory report on interventions of operators into operation of such automatic meters. Also, information from the mentioned automatic meters on the whole is entered into the permanent representative's PC and then from that computer it is delivered to the RGPD, which receipts gas into its gas pipeline. All measurements - from the gas analysis to devices designed for measuring quantity of gas are performed in presence of 1-3 permanent representatives (depend on capacity of the particular GMS).

It should also be noted that to ensure a greater reliability of gas accounting systems installed at border GMSs, two equivalent measurement systems are used and their measurement discrepancy must not exceed a maximum permissible error.

To oversee the state of automatic meter software, systems of reading automatic meters and develop of up-to-date software, in the NDPIASUtransgas research institute was set up the special department, which has all software and hardware components sufficient to provide maintenance and development of gas accounting systems.

In the international practice, receipt and delivery of natural gas between gas companies is performed at the same gas measurement point specified in a relevant contract. A company which such point does not belong to, could to have its representative at it assigned to perform particular activities on verification of the accuracy of measurements of quantity and quality of gas. Let us take the Waidhaus GMS. This gas measurement station is located in Germany near the Czech border. At that station receipt and delivery of gas is performed simultaneously between gas transportation companies from Czech Republic, Russia, Germany, and France.

Lately, in some government agencies an issue is considered concerning construction on the territory of Ukraine of backup GMSs in all directions of gas transmission - from Russia and Belarus - for customs monitoring purposes.

In some cases construction of backup gas metering stations in counteragent countries may be found inexpedient for the following reasons:

• high expense of projects;
• long time of construction;
• discrepancy between meter readings on different sides of the border is equal to the total error of the less precise (in terms of class) measurement system. For instance, should the currently operating measurement system "Anubar" be replaced with a cheaper one, the discrepancy between GMS measurements will be up to ± 1,5%, thus assuming the Russian in-transit-gas flow volume is 150 BCM/year, such discrepancy can be up to 2 BCM/year.

So, in our view, construction of check point GMSs in Ukraine would require considerable investments (USD 20-50 million), that is not reasonable neither in terms of economy nor in terms of technology. Also, the Russian Gazprom would hardly agree to switch from Russia- and Belarus-based gas receiving centers operating in full compliance with relevant laws to Ukraine-based GMSs.

However, to improve gas flow monitoring on pipelines that included in gas balance on the Ukrainian-Moldovian borders, GMSs and GFMPSs should be constructed as soon as possible. This is a primary task to be accomplished by the state-owned company "Ukrtransgas."

Since recent times, State Customs Service agencies factually have monitored gas flow across the Ukrainian customs border through border GMSs and GFMPs. This activity resulted in the issuance of a joint Order no. 21/37 "On the list of objects at which the customs monitoring of natural gas flow across the customs border of Ukraine is performed," dated 25/01/2000 and the Provisional Instruction on actual monitoring of natural gas flow across the customs border of Ukraine with the pipeline transportation," as of 15/08/99.