Page 6 - FSUOGM Week 47 2021

FSUOGM PIPELINES & TRANSPORT FSUOGM

Ukraine asks Gazprom to extend

gas transit deal for 15 years

UKRAINE UKRAINE has asked Russia’s gas behe- Currently Russia exports just under 200bcm
moth Gazprom to extend the current gas transit to Europe a year, of which around 100bcm go
Talks on a new transit deal that expires in 2024 for another 15 years and via the central and northern pipeline routes that
deal began in early offered to cut transit fees in half. include both the controversial Nord Stream 2
September. Ukraine’s Prime Minister Denis Shmygal said pipeline and the Ukrainian system.
in an interview with Radio Svoboda on Novem- Nord Stream 1 has a nameplate capacity of
ber 21 that Ukraine wants to extend the transit some 55bcm and if Nord Stream 2 is approved
contract with Gazprom and is currently negoti- then it will double the capacity of that route
ating with European partners. and be able to carry the majority of Russia’s gas
The Russian government reported the start of exports via the northern route to Europe without
talks on a new transit deal on September 8 held making use of the Ukraine route at all.
by Russian Deputy Prime Minister Alexander Putin’s offer to Merkel suggests Russia wants
Novak and the German government's commis- Europe to increase its commitment to buy gas.
sioner for gas transit through Ukraine Georg Makogon told bne IntelliNews that Russia would
Graf Waldersee. have to send a minimum of 30bcm via Ukraine
"Germany has been, is and will remain the each year to keep the Ukrainian pipe network
main partner for the Russian fuel and energy commercially viable.
complex in the European direction," Novak said However, the EU is reluctant to increase its
at the time. commitment as its Green Deal means Europe
According to the Prime Minister, Ukraine has is expecting demand for gas to decline in the
proposed to increase transit beyond the terms of coming decade as it further transitions to using
the contract to another 55bn cubic meters a year. renewable sources for its power needs. Merkel
Gazprom signed off on a new transit deal at the suggested in her September meeting with Putin
last minute in December 2019 that commits the that European gas demand from Russia could
Russian gas giant to send 40bn cubic meters via fall to zero over the next 25 years.
Ukraine’s Druzhba pipeline until 2024. In addition, Shmygal invited European
Currently Gazprom has been sticking scru- partners to use Ukrainian gas storage facilities
pulously to the deal that will earn Ukraine’s for gas storage. When the gas export network
pipeline operator, the Gas Transmission System was set up in Soviet times, the majority of the
Operator of Ukraine (GTSOU), some $2bn in gas storage facilities were built on what is now
fees this year. But the Russian gas companies is Ukrainian territory. In particular, President
sending exactly the amounts stipulated in the Volodymyr Zelenskiy and European Commis-
deal and no more, despite the gas shortage crisis sion President Ursula von der Leyen recently
in Northern Europe. At the same time Gazprom spoke about the possibility of using Ukraine’s
has increased exports to Europe, mostly via the storage facilities to house gas supplies needed
southern Turk Stream route that came online in each winter.
January. Shmygal noted that Ukrainian gas storage
"We are ready to transit this [55bcm] surplus facilities have a volume of 33bn cubic meters,
at a price twice lower than in the current con- but only about 20-24bn cubic meters are used.
tract. This once again confirms the ability of the "We can use our gas storage facilities as a
Ukrainian GTSOU to transport and transit twice European safe to store additional volumes of gas
as much as currently contracted, the system is for Europe in winter. To do this, we proposed
prepared for this," said Shmygal. to unite our efforts with some or all European
Sergiy Makogon, CEO of GTSOU, told bne partners and create a gas fund that will stabilize
IntelliNews in an exclusive interview earlier this possible crises, differences in the winter, "said
year that if Russia stops using Ukraine as a transit Shmygal.
route after 2024 then Ukraine would probably The idea should have some appeal as prices
decommission a large part of the network, which spiked this summer after it became clear Europe
is expensive to maintain. did not have enough gas in reserve to get through
Russian President Vladimir Putin told Ger- the winter after LNG supplies that could have
man Chancellor Angela Merkel in September covered the shortfall were drawn off to Asian
that Russia is open to increasing gas exports to markets where prices for gas are even higher
Europe and would happily send more gas via than in Europe. That has lead to talk in the EU
Ukraine if Europe would commit to sufficiently of creating a strategic gas reserves to prevent the
large volumes with long-term contracts. supply crunch repeating itself. ™

P6 www. NEWSBASE .com Week 47 24•November•2021