Page 61 - UKRRptDec19

9.0​ Industry & Sectors 9.1 ​Sector news
9.1.1​ Oil & gas sector news
Without a new, 10-year gas transit contract with Russia, the National Bank of Ukraine estimates gas transit will decrease from 90bn cubic meters this year, to 50bcm next year and to 30bcm in 2021.​ The resulting loss in transit fees would shave 0.6% off the GDP next year and 0.9% of GDP in 2021. As part of a quarterly inflation forecast, the central bank writes: “Russia is actively putting into operation bypass pipelines that by total capacity are able to completely replace the Ukrainian gas pipeline in the coming years.”
The volume of Russian gas transited via the Ukrainian pipelines in 2018 was 86.8 bcm​, and in 2019 (up until 28 October) 72 bcm. Revenue from transit fees plays a major role for the financial condition of Naftogaz. In 2018, this revenue was almost US$ 3 bn, which equals 2.3% of the country’s GDP, and in the first six months of 2019 it was US$ 1.54 bn (up 9.9% year on year).
Russia is pumping record high levels of gas – almost 300mn cubic meters a day – across Ukraine to the EU​, Serhiy Makogon, director of Ukraine’s Gas Transit System, writes on Facebook. Makogon speculates the Gazprom is preparing for a January 1 cutoff of gas to the Ukraine pipeline by maximizing sales of pipeline gas today. In the event of a cutoff, Gazprom will have a maximum amount of gas in storage to sell in Europe. This would buy time for Russia to get Nord Stream 2 commissioned and delivering gas to Germany.
Competition rules Ukraine’s gas import market, where 65 companies import the fuel from 18 European suppliers​, Andriy Kobolyev, Naftogaz CEO, writes on Facebook. Today, no supplier has more than 30% of the market, a sharp contrast to four years ago, when Gazprom supplied 90% of Ukraine’s imports. Ukraine stopped buying gas from Gazprom on Nov.25, 2015, preferring to buy gas at hub prices, largely from Slovakia. Much of the imported gas used by Ukraine originally comes from Russia.
The Svea Court of Appeal rejected on November 27 Gazprom’s appeal against one of the rulings of the Stockholm Arbitration Court in favour of Naftogaz​, the state gas producer and transporter reported the same day. The May 2017 ruling rejected Gazprom’s claims on the take-or-pay clause and the ban for natural gas re-exports under a gas supply contract, as well as agreed that Naftogaz was entitled to market-reflective adjustments to the gas price formula. The Svea court’s ruling cannot be appealed, Naftogaz clarified. This was the first of three appeals of Gazprom against the rulings of the Stockholm court. Other two appeals will be heard in February 2020 (on a gas supply case) and in autumn 2020 (on a gas transit case), Naftogaz reported, highlighting that the Stockholm court awards remain valid and in full effect regardless of the appeals. Recall, in December 2017, the Stockholm court ruled that Naftogaz should compensate Gazprom $2.02bn for part of natural gas it imported in 2013-2014; in February 2018, the court ruled that Gazprom should compensate Naftogaz $4.63bn for breaching its gas transit contract. This resulted in a net obligation of Gazprom to Naftogaz in the amount of $2.56bn.
61​ UKRAINE Country Report​ December 201 ​ ​www.intellinews.com