In February 2006, a Ukrainian-Russian joint-venture will begin construction of the first stage of a Natural Gas Pipeline that will increase Ukraines transport levels to Western Europe. The joint venture was formed in 2004 between Naftogaz Ukrainy and Gazprom. The construction of the $2.2-$2.8 billion pipeline from Uzhorod to Novopskov on the border with Slovakia will be completed by 2009. Construction of the initial section of the pipeline was postponed from 2005 to February 2006 and will take approximately two years to complete. The completed pipeline will have a capacity of roughly 670 Bcf per year and will permit a 25 percent increase in the flow of Russian natural gas to Europe. Ukraine is guaranteeing a zero tax rate on gas flows through the pipeline until the joint venture receives a positive return on investment.
The joint venture also has plans to construct a new pipeline from Alexsandrov Gay on the Russian portion of the Central Asia Center system to Novopskov in eastern Ukraine. This will aid in the transit of Turkmen natural gas to Ukraine.