Page 63 - UKRRptSept21

meters of gas into the country’s storage facilities as it face fears of being cut off while negotiating a new transit deal with Russia.
A new deal was signed at the last minute. Russia and Ukraine have a five-year agreement through 2024 that guarantees Russia will transport no less than 40bn cubic meters through Ukraine each year and must pay Ukraine at least $7.2bn over the course of the contract.
Naftogaz stopped buying gas directly from Russia in November 2015. The company began buying Russian gas from the European market. Ukraine’s gas monopolist bought it from Poland, Slovakia, and Hungary in a procedure known as “reverse flow.”
In July, Gazprom cut its pipeline deliveries to the EU by 10.3 billion cubic meters due to scheduled shutdowns of the Nord Stream 1 and Yamal pipelines for planned maintenance. Rather than make up for this shortfall by sending more gas across Ukraine, Gazprom chose to draw down its German and Austrian underground storage reservoirs to dangerously low levels, says Serhiy Makogon, CEO of Ukraine’s Transmission System Operator.
“Gazprom is devastating its underground storage facilities in Europe,” the head of GTSOU pipeline company Makogon told Ukraine pipeline operator’s press service. He said Gazprom-owned reservoirs in Germany are only 13% full, compared to a national average of 63%. Similarly, in Austria, Gazprom’s reservoirs are 14% full, while the national average is 48%. Talking before the Western Siberian explosion was known, he asserted: “Gazprom is extracting gas from storage facilities to fulfill its contracts. Accordingly, the gas shortage in Europe's underground storage facilities is largely artificial.”
Gas Prices on the European gas market hit $517 per 1,000 cubic meters on August 1. This is three times the level of $170 that Gazprom used in January to calculate its 2021 budget. Energy analysts say that Gazprom is forcing up the EU gas price to pressure regulators to commission the Nord Stream 2 gas pipeline this fall.
Tightening the natural gas shortage in the EU, Gazprom has cut by 50% gas shipments through the Yamal pipeline to Poland and stopped pumping gas into underground storage facilities in Austria, Germany and the Netherlands. With EU storage at only 57.5% of normal mid-summer levels, unfulfilled demand for gas is 16 billion cubic meters, Interfax reports from Moscow, citing data of the Gas Infrastructure Europe portal.
Ukraine’s average import price of natural gas in July was 2.5 times higher than one year earlier, the Economy Ministry reports, citing State Customs Service data. The average July price of $357 per 1,000 cubic meters was 7% higher than June. This is the highest level since January, 2015.
Naftogaz needs $20bn in investment over this decade to develop gas fields in the Black Sea and deep gas fields on land, Ukraine’s state oil and gas company reports. Naftogaz production has been slowly declining hitting 14bn cubic meters last year. During the first half of this year, Naftogaz production unit, UGV, cut production by 5.3%, hitting 6.8bn cubic meters.
63 UKRAINE Country Report September 2021 www.intellinews.com