The reaction of Gazprom to the decision of the Stockholm court on compensation for Naftogaz $ 4.6 billion through the “transit” lawsuit was almost lightning. Despite the fact that the decision of the Stockholm court is not subject to appeal, the Russian side has reduced the supply of gas to the Ukrainian side by 20%. Taking into account the critical situation with extremely low temperatures in early March and the technical features of the gas system, schools were temporarily closed all over Ukraine and the government appealed to Ukrainians to “tighten up” gas consumption during the critical period.
This situation has arisen as a result of a coincidence in a number of circumstances. According to official statements, Ukraine does not buy gas from Russians (Ukraine does not buy gas on the border with Russia since November 26, 2015). In addition, in the heating season 2017-2018 the Ukrainian underground storage facilities have the highest gas reserves over the past few years. In mid-February 2018, gas at underground storages was 10.9 billion cubic meters, for two weeks has become 1 billion cubic meters less. But stocks are still higher than they were at the end of the heating season in recent five years. However, Ukraine cannot use them to the fullest extent. Despite the high level of filling of Ukrainian gas storage facilities, the capacity of pumps from gas storage facilities (taking into account the area of Ukraine) does not cover the daily consumption of gas due to severe cold throughout the territory of Ukraine.
It should be noted that Ukraine, since 2014, has systematically reduced gas consumption. In 2014, it reduced natural gas consumption by 16% compared to 2013, to 42.6 billion cubic meters. m from 50.4 billion cubic meters. In 2015, Ukraine reduced its gas consumption to 33.727 billion cubic meters, which is almost 21% less than a year earlier. Ukraine in January-November 2016, compared to the same period last year, reduced gas consumption by 6.2% to 27.6 billion cubic meters. m. In 2017, the use of natural gas in Ukraine in comparison with 2016 decreased by 1.3 billion cubic meters: from 33.2 to 31.9 billion cubic meters.
Why this situation has happened? First of all, according to the decision of the Stockholm court, Naftogaz is obliged to buy, and Russia has to sell gas to Ukraine. At the same time, the arbitration almost canceled the provisions of “take or pay”, and the minimum annual volume of gas purchases from Naftogaz was reduced from 52 to 5 billion cubic meters. And in case if the NAC does not choose a contract minimum, only 4 bln.
Ukraine ordered Europeans a fixed amount for deliveries from Russia, the remaining capacity of Europeans closed other contracts. The reason for the deficiency is one – the violation of the decision of the Stockholm arbitration by Gazprom. As a result, Ukraine could not reserve itself the European capacity “in reserve” if, suddenly, the Russian Federation would refuse to supply us with gas.
So, there was a technological imbalance, which would close a few days after the abandonment of abnormal colds. Gas delivery from storage facilities was technologically limited. The maximum, which today can extract Ukraine from the warehouses – 115 million cubic meters per day. Given the sharp and abnormal cooling in the late winter, Ukraine needs 200 million cubic meters. m per day. Lack can be blocked by its own gas production and imports. Today, the daily production of gas is 57 million cubic meters (41 million cubic meters is produced by the state company “Ukrgazvydobuvannya”, gas is intended for the population). Ukraine still lacks 30 million cubic meters per day (taking into account technological losses). Missing cubic meters can be blocked at the expense of imports – from Russia and Europe.
In late February, the commercial director of the Naftogaz group Yuri Vitrenko said that Naftogaz began importing gas through the cooling down to 12 million cubic meters per day. The reason for the lack of gas is related to the following. Our main supplier, Europe, also suffers from frost. Accordingly, demand for gas has increased, and, accordingly, prices have risen. Therefore, since March, Ukrainian traders have reduced their imports. According to the Slovak operator Eustream, the application from Ukraine has decreased five times – in February the application amounted to 12.5 million cubic meters. m, since March 1 – already 2.5 million cubic meter. It would be possible to compensate gas supplies through purchases in Russia. In February, “Naftogaz” sent a prepayment to Gazprom for March gas supplies. However, March 1, a Russian supplier without a “war” announcement returned a prepayment. The reason for the deputy chairman of the board of Gazprom, Oleksandr Medvedev, was the absence of an additional agreement to an existing contract with Naftogaz necessary for the start of deliveries.
It should be noted that the Ukrainian GTS is used not only for distribution of gas in the country, but also for supplies to Europe. It requires some kind of pressure to maintain its proper work. But instead of the 60-65 kgf / cm2 foreseen by the transit agreement, the gas is fed at 51-59 kgf / cm2. Moreover, during the 2 months of the current year, the Russians have never fulfilled the terms of the contract for transit – both in terms of compliance and in terms of supply.
This behavior of Gazprom increases Ukrtransgaz’s costs for transportation.
As a result, the Government and the National Security Council of Ukraine were forced to launch a series of emergency measures to restrict gas consumption. By March 6, the country was recommended to stop the work of schools and kindergartens, universities – to reduce the temperature by a couple of degrees, and the generating enterprises – to switch to fuel oil instead of gas. It is expected that this situation will stabilize with the March warming of the temperature.
The actual attempt to discredit Ukraine and its GTS as a faithful partner and operator of gas streams has a direct impact on European buyers of Russian gas. The political decision to reduce pressure in gas pipelines substantially worsens the image of Russia as a gas supplier to Europe.