Page 57 - UKRRptJun20

9.0​ Industry & Sectors 9.1 ​Sector news
9.1.1​ Oil & gas sector news
A gas glut forced Russia’s Gazprom to stop shipping gas across Poland on May 26 on the Yamal-Europe pipeline​, Bloomberg reports in a story headlined: “Russian Gas Flows to Europe Plunge After Prices Collapse.” Prices dropped to $41/1,000 cubic meters, near the transit costs for Gazprom from its Yamal fields. Qatar says it has no plans to cut its LNG shipments to Europe. Under the ‘ship or pay’ clause in the new Gazprom contract with Ukraine, Gazprom has to pay for contracted pipeline volumes, whether they use them or not.
Gazprom almost halved its gas transit via Ukraine ​in January – April, to 15.5bn cubic meters, according to Ukraine’s gas pipeline operator. The state-controlled gas company sees its exports, mainly to Europe, falling to 166.6bn cubic meters (bcm) in 2020 from around 199.2 bcm last year. It said it was caught up in a “perfect storm” of the warm winter season and the global outbreak of the coronavirus. The reduction shifts Gazprom further away from its long-term target of 200 bcm in gas exports to Europe, a key source of revenue for the company. Under the five-year contract signed last Dec. 29, Gazprom commits to pay transmission fees for shipping 65bn cubic meters this year. Starting next year, the contracted volume falls 40bn cubic meters.
In the EU, gas storage reservoirs are 71% full. ​In Ukraine, which has the largest reservoirs in Eastern Europe, the underground caverns are 57% full. Ukraine has 17.6bcm in storage, 60% more than this time last year.
Ukraine’s Cabinet of Ministers agreed on May 27 to import enough US natural gas to cover half of Ukraine’s annual import needs. ​Under the memorandum signed with Louisiana Natural Gas Exports Inc, Ukraine would import “at least” 5.5bn cubic meters of gas via Poland. On an average year, Ukraine imports about 10bcm. The gas would arrive as liquefied natural gas at Poland’s sole LNG landing terminal, at S´winoujs´cie, on the Baltic. The EU is funding a major expansion of the terminal. Ukraine’s gas import price would be pegged to prices at Louisiana’s Henry Hub. Konstantyn Chyzyk, a deputy Energy Minister of Ukraine, wrote on Facebook: “This will strengthen our energy security and independence, as well as reduce Russia’s influence, not only on Ukraine, but on Europe.” Chyzyk, who worked on stepping stone agreements in December and in March, predicts the Poland-Ukraine pipeline connection will be ready in 2023.
Poland exported 690mn cubic meters of gas to Ukraine in the first quarter,​ Jerzy Kwiecinski, CEO of PGNiG, Poland's state oil and gas company, tells Polish Radio. He predicts Poland will increase exports in the 2020s, drawing on LNG arriving at S´winoujs´cie and Norwegian gas arriving in 2022 through the Baltic Pipe gas line.
The Baltic pipeline is to bring 10bn cubic meters a year to Poland, ​more than the country needs. To guarantee supplies to the pipe, Polish state-owned
57​ UKRAINE Country Report​ June 2020 ​ ​www.intellinews.com