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Wednesday, March 21, 2018

Kiev will suffocate without Russian gas

Despite the loud and absurd statements about energy independence from Russia, Ukraine is forced to resume the purchase of gas from our country. A letter with such a request “Gazprom” received from “Naftogaz”. The shortage of fuel in Ukraine is obvious — until recently, the required amount Kiev found in Europe. But the demand for gas is growing in the Old World, and no excess fuel. Russia may respond to the request of Ukraine. But it is possible that in response to our gesture of goodwill Kiev will declare that Russian twists his hands through unreasonably high prices. But the fact remains that gas prices are higher in Europe than in Russia. Therefore, Ukraine will have to either hold back political attacks on our country, or, as before, to pay for the gas, begging for it in the Western market.

photo: morguefile.com

What we wanted to prove. Ukraine is ready to go cap in hand to Russia to provide themselves with “blue fuel”. For the first time in six months, Kiev said it was ready to resume Russian gas imports.

Nothing strange in this. Indeed, from November 2015, Ukraine buys gas in our country. The Ukrainians have accused Russia of excessive prices, refused to contract with “Gazprom” and started to buy fuel at the reversed schemes in European countries.

Kiev argued that it is cheaper. However, it is wickedness. On average, during this time, European gas bypassing the Ukrainians in $232-242 per thousand cubic meters. The price of “Gazprom” was close to $225. Let the difference in $7-17 not great. But even now, with a significant drop in demand for gas to Ukraine annually requires up to 45 billion cubic meters. When you purchase this volume in the Old World have to lay out about $10.5 to 11 billion per year. Import from Russia is cheaper by $500-800 million According to conservative forecasts, the deficit of Ukraine’s budget in 2016 will be $3.4 billion So need to save. Even at the expense of political ambitions.

But there is another aspect. Gas production in Europe is declining year by year. The main regions for the production of “blue fuel” in the Old World are the Netherlands, UK and Norway. The first two state of at least decades, gradually losing ground in the global energy market. Norway is also close to announce the reduction of production at its offshore fields.

And the demand for gas in Europe, by contrast, is growing. For ten years the share of imports in the consumption of “blue fuel” to European countries close to 50%. In 2015, the demand grew by 4%.

Accordingly, unnecessary and, most importantly, cheap fuel from the Europeans to Ukrainians there. According to head “Gazprom” Alexey Miller, the daily volume of reverse gas from Europe to Ukraine fell in June to 6.4 times compared to may and 16.8% from April.

Russia is not against to close the hole in the Ukrainian energy balance. But where it leads — there is no clarity. The gas war of Moscow and Kiev, although moved from the active to the passive phase, but continues.

Kiev filed in the Stockholm arbitration court two claims — the first relates to the purchase and sale of gas, the second — conditions of transit of Russian gas through Ukraine to Europe. The total amount of payments, which “Naftogaz” expects to receive from Gazprom, up to $50 billion.

The Russian monopoly also is suing Kiev to Stockholm. The amount of claims exceeds $31 billion And if the claim of Ukraine is built on is not quite clear the allegations of overpricing, our requirements are based on the Ukrainian side signed the agreements.

According to the Deputy Director General for gas problems national energy security Fund Alexei Grivach, it is possible that the step towards Ukraine will result in the future for Russia’s new judicial problems. “In addition, Kyiv wants to buy gas in our country at the cost of the fuel in the habach — in transport hubs. Not going to pay for his delivery to its storage facilities. Such pricing is not clear and far from accepted in the same Europe, traditional patterns of supply of fuel. Ukraine is able to save on the resumption of gas relations with Russia, but they will have to back its negotiating position in the normal, legislatively confirmed direction”, — said the expert.

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