Ukraines aging Natural Gas infrastructure is of growing importance and concern both to European consumers and Russian producers. Some of the pipes in the Ukrainian network have been in operation for 20-30 years, and repairs are rarely carried out because of a lack of available funds. In addition to Pipeline disrepair, full capacity utilization is a problem. Roughly 1.4 Tcf per year of spare capacity is available on the system. An additional 1 bcf/year could be added through rehabilitation and upgrades of the existing infrastructure.
In June 2002, heads of state from Ukraine, Russia, and Germany, agreed to develop an international consortium called the OOO (Russian abbreviation for a Limited Liability Company) International Consortium for the Management and Development of the Gas Transport Network to manage and upgrade Ukraines natural gas distribution infrastructure. In October 2002, Ukrainian and Russian state-owned Oil and gas concerns, Naftogaz Ukrainy and Gazprom, signed preliminary agreements, and in January 2003, the new company was registered in Kiev, with each company holding 50 percent. The partners are still considering several proposals for the structure and membership of the Naftogaz Ukrainy/Gazprom consortium. Germanys Ruhrgas has been present at the consortiums negotiations, but its role remains unclear. Several other parties have shown interest in the consortium, including Gaz de France and the EBRD.Ukraine has also suggested inviting other Caspian Sea region producers Turkmenistan, Kazakhstan, and Azerbaijan to participate.