Page 56 - UKRRptMay19

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Naftogaz will offer Gazprom to book 60bn cubic meters for ten years transit capacity per year at the upcoming trilateral negotiations, the executive director of the state-owned company Yuri Vitrenko said on April 26. The current contract for the transit of Russian gas through Ukraine expires this year. The decision to extend it has not yet been made. Earlier, in his interview with RBC-Ukraine, the CEO of Naftogaz, Andrey Kobolev, said that Gazprom had begun to officially notify the countries bordering on Ukraine that it would stop gas transportation through Ukraine from the new year.
Ukrnafta boosts hydrocarbon output 8% y/y in 1Q19. Ukraine’s leading oil company Ukrnafta (UNAF UK) produced 376 kt of crude oil and condensate in 1Q19, which is 6.4% more y/y and 1.2% more qoq, according to its Apr. 24 update. Its production of natural gas reached 290 mcm in 1Q19, which is 10.6% more y/y and 2.0% more qoq. Total production of hydrocarbons reached 51,350 boepd in 1Q19, according to Concorde Capital calculations, which is 8.0% more y/y and 1.6% more qoq. The increase was reached due to production stimulations at its existing wells and reactivation of some idle wells, the company commented. Based on interim results, the company updated its production plan for the full year, expecting that its oil production will reach 1.507mmt (up 4.1% y/y) and gas production will reach 1.129bcm (up 4.3% y/y).
The team of Ukraine's President-elect Volodymyr Zelenskiy is urging the nation's government and natural gas monopoly Naftogaz to reduce gas prices for households from May 1. Kyiv should hold consultations with the International Monetary Fund (IMF) in order to secure a reduction in gas tariffs. "The last four months, gas prices have been falling in Europe and now the price of gas for the population in Ukraine is higher than the price of gas on the stock exchange in Europe," the statement reads. Meanwhile, Zelenskiy himself has avoided any public statements over the past days. News agency Interfax reported the same day that the government and Naftogaz agreed on April 23 to reduce household prices for natural gas and heat generation by 3.5%, from UAH8,550 to UAH8,247 starting from May 1.
The EU Council approved a European gas directive on April 15 that is expected to delay commissioning of the Nord Stream 2 gas line – and potentially leave it half empty. Extending EU rules to non-EU pipelines, the directive will force Gazprom to “unbundle” or hand over operation of the line to a company independent of Russia’s state gas producer. Potentially, more serious, half of the pipe has to reserved for third companies. Given Gazprom’s gas export monopoly, this could leave half of the pipe empty until Russia’s creates a separate gas exporter. Ukraine’s Mission to the EU issued a statement welcoming the new rules.
Russian gas flowing through Ukraine’s pipelines to Europe increased by 5.3% during the first quarter of this year, compared to last year, reports Ukrtransgaz, the pipeline system operator. Interfax-Ukraine calculates that Russia sent 20bn cubic meters through Ukraine. One year from now, Russia plans to open two bypass gas lines around Ukraine – Nord Stream 2 through
56 UKRAINE Country Report May 2019 www.intellinews.com