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9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Ukraine’s Cabinet of Ministers ordered the Economy Ministry on March 3 to secure Naftogaz (NAFTO) natural gas supplies to households at a price that will be fixed for one year, Interfax-Ukraine reported the same day. The Economy Ministry is ordered to prepare respective resolutions by March 5. According to a draft cabinet resolution presented by the Energy Ministry, Naftogaz’ subsidiary and Ukraine’s largest natural gas producer UGV will be ordered to offer a fixed wholesale price for one year for gas that will be supplied to households and heating utilities. Also, UGV will be ordered to sell its natural gas to all local traders at no worse conditions compared to Naftogaz trading subsidiaries starting April 2021. This will help all local traders offer natural gas for households at the price fixed for one year, as the power sector regulator is demanding, acting energy minister Yuriy Vitrenko stated.
January’s average gas price was 23.5% higher than December’s price,
according to State Customs Service numbers. In face of the price hike, the government has capped prices through March 31 at the January average price -- $250 per 1,000 cubic meters. The December price was 11% higher than the November price.
Europe’s weather is warming to late-spring levels from deep cold in February. Meanwhile, Russia remains locked in a cold winter. This has led to lower prices for European gas and a decrease in Russian gas transit through Ukraine.
European prices are falling from high levels even as Russian gas is being held back to meet domestic demand. As a result of the combination of warm weather in Europe and cold weather in Russia, two things have happened.
First, European gas prices have fallen, to c$200/mcm ($5.7/mcf) from January’s average c$260/mcm ($7.4/mcf). Second, the transit of Russian gas through Ukraine has fallen to c70mmcm/d in recent days from an average of c120mmcm/d in the first half of February.
“The European gas market is normalizing, but Gazprom’s position still much-improved,” BCS Global Markets said in a note. “This brings to a close a very strong run of European gas prices since mid-December, as cold weather in first Asia, then Europe tightened global gas markets, rapidly depleted European storage, and drove up European gas prices. Regardless of the quick warm-up in Europe, the European gas market is in much better shape than it was just three months ago, mostly due to a swift drawdown of gas storage from overly full to below average, and a full 27bcm below that seen this time last year.”
Ukraine’s leading natural gas producer Naftogaz (NAFTO) is going to invest $7.3bn in exploration and production (E&P) of hydrocarbons in 2021-2025, according to its strategy presented on Feb. 18. In the next ten
52 UKRAINE Country Report March 2021 www.intellinews.com
