Page 39 - bne monthly magazine October 2022

bne October 2022 Cover story I 39
Does Ukraine have enough gas to survive winter? Sergiy Makogon, CEO
of GTSOU, says the answer is yes
Dominic Culverwell in Kyiv Can Ukraine keep its citizens
warm this winter? In Kyiv and
across the country, many are asking this question as the heating season approaches and the gas storage tanks are still lacking crucial reserves. Ukrainian President Volodymyr Zelenskiy announced this year will
be the “most difficult winter of all the years of independence” and fears grew after Ukraine’s national gas company, Naftogaz, warned that this year’s heat- ing will start later, end earlier and be 3-4 degrees lower.
But Sergiy Makogon, CEO of Gas Trans- mission System Operator of Ukraine (GTSOU) is optimistic that Ukraine
is well prepared for the challenges ahead, despite only having 13bn cubic metres in its gas storage facilities. In an exclusive interview with bne IntelliNews he mentioned that Naftogaz is continu- ing to pump gas into Ukraine’s storage facilities and expects to reach 14.5 bcm by mid-October, the start of the heating season. Although this is still far from the 19 bcm the government ordered from Naftogaz, Makogon says it will
be enough for a standard winter and explained that Ukraine has a backup plan in case the winter is harsher than expected.
“In case of unexpected weather condi- tions, we created possibilities to import gas from Europe (...) in the amount of 54 mcm per day,” Makogon said. “It will come mainly from Slovakia, Hungary and Poland and also some volumes could be delivered from the Balkan pipeline – Greece, Turkey to Bulgaria and Romania to Ukraine.”
He said that GTSOU had done its homework and tested the Balkan route last year to prepare for issues in the local markets and increase the possibility for Ukraine to import gas from different locations. However, with Europe also suffering an energy crisis, some states may not be willing to give their gas supplies to Ukraine. Nevertheless, Makogon believes that this problem will be solved “on the commercial or political level”.
Moreover, with millions of Ukrainians leaving the country, Ukraine is likely to use far less gas than in previous years. Already Makogon has noted
a 50% reduction in consumption in the industrial sector due to Russia’s military aggression forcing companies to stop operations, particularly on the front lines, and also the high cost of gas, which has hit $1,000 per thousand cubic metres in the unregulated
Sergiy Makogon, GEO of GTSOU / bne IntelliNews
status. In particular, he is keen that Europe and Ukraine work together
to develop Ukraine’s significant gas reserves, one of the largest in Europe estimated at 1.09 trillion cubic metres, which he believes will help the conti- nent wean itself off Russian gas.
In addition, Ukraine began exporting electricity to the EU in the summer after successfully synchronising its electricity grid with the Continental European Grid on March 16 due to the Russian invasion. Ukraine has a surplus of electricity which Makogon sees as another answer to managing Europe's energy crisis. Currently, the country is exporting 300 MW to Europe but has the ability to increase to 2 GW.
Whilst Makogon acknowledged that the heating season will be difficult for Ukraine and Europe, he believes that they will be able to manage it together. Indeed,
“In case of unexpected weather condi¬tions, we created possibilities to import gas from Europe (...) in the amount of 54 mcm per day”
segment. Many companies are choosing to wait until gas prices lower before resuming operations.
Speaking about Ukraine’s future in Europe’s energy sector, Makogon sees exciting opportunities for co-operation since Ukraine received EU candidacy
he claims the most necessary thing is to stand together against Moscow.
“It is important to oppose the blackmail of Russia, to show that our countries can find a way to oppose the aggressive position of our northern neighbour,”
he stated.
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