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Friday, February 16, 2018

Frost reminded Kiev about the “gas curse”

The extreme cold that gripped the whole of Eastern Europe, have become extremely unpleasant surprise for Ukraine. Its gas reserves for the heating season is significantly less than a year ago, but the consumption of “blue fuel” on the contrary, increased. But the main thing is the issue of gas transit from Russia to Europe, which may be terminated in the foreseeable future.

Monday was the last day of abnormally severe frosts, which covered the European continent. And although they were relatively short-lived, for Kiev, it turned into a really serious test.

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“This is a historic maximum. This was not during the Soviet Union nor in modern Russia”

That this winter could be the coldest in decades, forecasters warned last fall. This immediately gave analysts a reason to say that Ukraine is waiting for sverhdorogoy heating season. No sooner had the leadership of the company “Ukrtransgaz” to report on the reduction of gas consumption by 4% over last year (this was possible also thanks to the warm winter), as after a few days the company had to report a sharp rise in the selection of blue fuel from underground storehouses. If January 1, the company seized of 43.3 million cubic meters, by 6 January, when Ukraine fell cold and snowfall, the volume of selection has jumped to 100 million cubic meters.

In 2017, Ukraine was included with gas reserves amounting to almost 12 billion cubic meters (or 14.3%) lower than a year ago, and from the beginning of the heating season (October 13) was used 2,739 billion cubic meters. Despite the fact that created on the winter reserves were originally significantly less than optimal (about 14.5 billion instead of 17 billion cubic meters), “Naftogaz of Ukraine” has repeatedly stated that for the safe passage of the cold period this will be enough. According to estimates of the company at the end of the heating season, underground storage will remain 7-8 billion cubic meters of gas with an acceptable level of 5 billion However a number of independent experts before the start of the cold weather, warned that the situation is not so optimistic, and without the purchase of additional volumes of Russian gas Kiev can not do.

Judging by forecasts of weather forecasters, in the coming days of extreme cold, in some parts of Ukraine reached minus 20 degrees, needs to retreat. But a short invasion of cold weather has once again demonstrated the vulnerability of the energy infrastructure of the country. According to Ukrainian news, 7 January (i.e. the day after the beginning of the cold) in seven regions of the country were de-energized for about 70 settlements, and the roads are six areas was a restriction on the movement of vehicles. From a number of places we have news about deaths from hypothermia and frostbite, due to the snowstorms became more frequent fatal outcome.


Like the cold in recent years were rare, even for Moscow. View of the Borodino bottommost new year high for the Ukrainian fuel and energy complex has yet to calculate, but for “Naftogaz of Ukraine” can be very useful was the agreement about credit line for 500 million dollars for the purchase of gas, which company peed with Deutsche Bank and Citibank on the last day of 2016. It is assumed that the loan taken under the guarantee of the world Bank, will operate for four years (two years for the purchase of gas and two years to pay off the debt). And this is not the first case when “Naftogaz” have to borrow from international financial institutions for heating: in 2015, when Ukraine refused to buy gas in Russia, the company was awarded a gas loan of 300 million dollars from the European Bank for reconstruction and development.

The result of the financial policy of “Naftogaz of Ukraine” is well-known is a continuous growth of utility tariffs for the population and the cost of gas for industrial consumers. At the end of last year, one of the largest chemical enterprises in Ukraine – Odessa port plant, which produces nitrogen fertilizers, ammonia and urea, was forced to stop production due to rising gas prices, which is the main raw material, and the inability to repay debts to “Naftogaz”.


Simultaneously with the growth of domestic consumption of gas Ukraine was faced with a significant reduction of transit of blue fuel from Russia. In the last week of the previous year (22-28 December), Naftogaz reported a decrease in transit by 19% up to 120,8 of 148.9 cubic meters per day. The reason was the expansion of access to Gazprom’s German pipeline OPAL, which is adjacent to the gas transportation system “Nord stream” near the town of Greifswald in Northern Germany. This immediately allowed for an increase in download of OPAL from 50% to more than 80% of capacity, and it is through the Ukrainian transit. “According to operational data, the “Nord stream” loaded, even more than 100%,” – said the head of Gazprom Alexei Miller at the new year conference call.

Meanwhile, in 2016, Russian gas exports to Europe exceeded 179,3 billion cubic meters, which is 12% more than in 2015. “This is a historic maximum. This was not during the Soviet Union nor in modern Russia”, – commented on the results Miller. While Gazprom is ready to increase exports to bypass Ukraine and beyond, announcing the beginning of works on construction of “Turkish stream” on the bottom of the Black sea in the second half of 2017 and the commissioning of the “Nord stream – 2” at the end of 2019.

In Kiev these plans, the inevitability of which becomes more real, in the beginning of the year caused a very nervous reaction. January 5 the head of “Naftogaz of Ukraine” Andrey Kobelev on TV and publicly admitted that in case of realization of new pipeline projects Russia can do without Ukraine as a transit country. So KOBOLEV addressed the European companies to participate in the management of the newly created company – operator of the gas transportation system “gas pipelines of Ukraine”, saying that after 2019 it will be able to offer more attractive tariffs for transit than the new Russian routes.

“It is necessary that the Europeans have realized that Ukraine is not just a partner that wants to join Europe. In fact, we share a part of my business, I want to share with the Europeans to help us to ensure that after 2019 transit through the territory of Ukraine will remain. This is a very important process, because to convince them hard. Until we see real interest from only three companies, which are with us real negotiations”, – said the head of “Naftogaz”, without mentioning, however, neither the names of these companies, and no investment in hard-worn Ukrainian “pipe”.

This television appearance Kobolyev took place the day before in Ukraine, the collapse of the snow, but the sharp increase in gas consumption due to cold weather forced the Ukrainian side to strengthen the rhetoric. “The coming days will show, dare the Kremlin Directive Gazprom to trigger a third gas crisis. Weather for this looks pretty favorable,” – said, in particular, the head of the Ukrainian center for global studies “Strategy XXI” Michael Gonchar. In his opinion, at the end of January – early February due to severe cold Russia will be forced to reduce gas supplies to Europe, however, are guilty of this will be announced Ukraine allegedly seizes the transit gas for its own needs. “All of this is done in order to “hour X” (when you receive a signal from the Kremlin) to stop the transit through Ukraine”, – says Gonchar.

This statement is immediately followed by the comment “Naftogaz”: “it is likely a situation when Gazprom will not have enough resources on their heating, and for export to the European Union. Then the extreme will try to make us. Our business – publicity. Waiting for your favorite song to frighten the fact that Ukraine takes gas from its subways. This is our gas that we pumped into storage for that winter away. No obligation to help our Gazprom stock when it is not enough, Ukraine does not have”.

However, “Naftogaz” announced the preparation of another gas crisis to put pressure on the European Union in mid-December, when it became clear that the coming winter will be substantially colder than the previous two. Thus, the Ukrainian company sent a clear signal to the Stockholm arbitration, which last year considering mutual claims Naftogaz and Gazprom. The first series of decisions needs to be made in March, but this weather is not yet time to force the Ukrainian side to go on provocation.


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