The European Bank for Reconstruction and Development (EBRD) and the Gas Transmission System Operator of Ukraine (GTSOU) have signed an agreement to formalise their cooperation on low-carbon hydrogen and to develop hydrogen supply chains.
“I am very pleased that the EBRD and GTSOU are cooperating to support each other’s activities regarding hydrogen. Ukraine relies heavily on fossil fuels across all sectors of its economy and hydrogen can represent a good alternative for decarbonisation, and reduce reliance on fossil fuels. Supporting the green transition of our economies is a key priority for the EBRD,” EBRD Managing Director for Green Economy and Climate Action Harry Boyd-Carpenter said.
CEO of GTSOU Sergiy Makogon said that the challenge of hydrogen therefore is to develop technology to scale up hydrogen use, to create the necessary conditions and infrastructure for its production, transportation and consumption.
“All this requires time, effort and cooperation by all stakeholders. We recognise the role of natural gas as one of the key energy sources and transition fuel on the path to carbon-free economy, which will remain significant for this transition period. As the operator of the gas transmission system, our task is now to prepare our infrastructure for the decarbonised energy markets of the future,” he said.
According to the report, the EBRD recently launched a study on the potential for developing different segments of the hydrogen supply chain across many of the economies where it invests, including Ukraine.
NJSC Naftogaz Ukrainy plans to actively develop the function of gas trading and from the organized market to become a market maker on it, Head of its board Yuriy Vitrenko announced the company’s plans at the 12th International Ukrainian Energy Forum of the Adam Smith Institute in Kyiv.
“Naftogaz will develop full-fledged trading […] In the future, we want to build a full-fledged trading function as part of Naftogaz. We see the need to work in the market and become a market maker, provide liquidity to the Ukrainian gas market and ensure the construction of a platform on which everyone can offer standardized products,” he said.
Vitrenko said that over the past few years, Naftogaz has been selling mainly gas of its own production and certain volumes of gas from storage facilities.
“I would not call it trading at all,” the head of the board said.
Commenting on the plans for the development of trading on the sidelines of the forum, Vitrenko said that Naftogaz, as a national company responsible for energy security, must ensure the priority of using its own gas to meet the needs of domestic consumers, the population.
“We produce approximately 15 billion cubic meters of gas [per year]. The population consumes about 12 billion cubic meters of gas through heat supply and direct consumption. Therefore, in principle, our own gas should be considered as a strategic resource to meet the needs of the population,” the head of Naftogaz board said.
At the same time, he said this does not mean that there should be no market and market pricing in this segment.
“But from the point of view of security of supplies, we must understand that this resource is primarily for the population,” Vitrenko said.
With regard to the imported resource, he said that Naftogaz considers it from the point of view of how much the market needs insurance from the national company to ensure sufficient volumes of gas on the wholesale market for the needs of the industry.
“But even in this segment, we understand that our responsibility, as a national company, is to develop the market, to be a so-called market maker: to provide real liquidity and real development of the market,” the head of the company’s board said.
According to him, currently Naftogaz sells gas on the Ukrainian Energy Exchange, but until there are opportunities for real trading, in accordance with international standards, it is difficult for the company to be a market maker in the market.
DTEK Oil & Gas produced over 960 million cubic meters of gas in January-June 2021, which is 10% more than in the same period in 2020, the company said.
“DTEK Oil & Gas is steadily increasing gas production thanks to systemic investments and the introduction of innovative technologies,” CEO of the company Ihor Schurov said.
The company is reportedly planning in the fourth quarter of this year to complete a large infrastructure project to build a refrigeration unit to optimize production at Machukhske field (Poltava region).
DTEK Oil & Gas has also already started geological exploration and office work in new deposits – Budyschansko-Chutivska and Zinkovska fields, which supplemented the company’s asset portfolio in 2020, the report says.
DTEK Oil & Gas recalled that in general, in 2021, the company is carrying out a program of drilling, workover and stimulation at base fields in Poltava region: during the first half of the year, the company commissioned two new wells, as well as carried out workover and stimulation operations at 21 wells of the operating stock.
Natural gas supplies to Ukraine from the EU in June 2021 amounted to 90.3 million cubic meters, which is 10.6 times more than in May (8.5 million cubic meters), the press service of Gas Transmission System Operator of Ukraine (GTSOU) has said.
According to its data, the entire volume of June imports was received by backhaul from Hungary.
At the same time, total supplies to the country in the first half of 2021 fell 12.4 times (by 7.405 billion cubic meters) compared to the same period last year, to 651 million cubic meters. In particular, in the mode of a customs warehouse for storage in the UGS facilities, the country received 97 million cubic meters of gas in the six months.
Net exports of natural gas from Ukraine to European countries in June amounted to 15 million cubic meters, re-export – 7 million cubic meters. In total, in January-June-2021, some 64 million cubic meters of gas were exported, 689 million cubic meters – re-exported from the customs warehouse.
“The unique ramified infrastructure of the Ukrainian GTS allows you to quickly and flexibly respond to fluctuations in demand and, if necessary, provide additional transit capacities to European partners,” Serhiy Makogon, the head of GTSOU, said.
At the same time, he stressed, in the absence of a long-term transit contract, the infrastructure of the Ukrainian gas transportation system will be optimized, and the European market will lose these maneuverable capacities, becoming dependent on the Gazprom monopoly.
“The threat of building bypass gas pipelines and monopolizing supply routes is a threat to all Europeans from the point of view of energy and economic security,” Makogon summed up.
Smart Energy in January-June 2021 reduced gas production by 0.2% (by 300,000 cubic meters) compared to the same period last year, to 199 million cubic meters, the press service of the group said.
In addition, the production of gas condensate by the companies of the group increased by 1.2%, to 17,800 tonnes, liquefied propane-butane – by 12.3%, to 5,100 tonnes.
According to the press service, despite the natural depletion of reservoir energy in the productive horizons of the fields developed by Smart Energy, the group continues to maintain production volumes at a stable level.
“We are keeping our production of natural gas stable, primarily due to our new wells in Poltava region. Taking into account this fact and positive dynamics of price for natural gas, we are planning to spud at least two more new wells in H2 this year,” Serhiy Hlazunov, the CEO of Smart Energy Group, said.
“In February the company spudded one more new development well, No. 29, at Svyrydivske field as well. The target depth is 5,450 meters. Currently the well has reached a depth of approximately 5,250 meters. Drilling operations are ahead of schedule. Subject to successful testing, production hook-up is now expected by the end of Q3, 2021,” the report says.
“Arkona Gas-Energy is getting ready to development of Svystunkivsko-Chervonolutske field (Poltava region). The company is completing supplementary prospecting and exploration as well as design works. During next two months it is spudding well No. 4. Start of 3D seismic is planned for Q4 this year as well,” the company said on its website.
“Preparations for upgrade works to the gas processing plant are in progress. The upgrade includes equipment modernization and increase to the liquids tank storage capacity. The works are scheduled to commence in Q4, 2021,” it said.
The European Bank for Reconstruction and Development (EBRD) will provide a EUR 10 million two-year committed local currency-denominated working capital loan to the Ukrainian electricity and gas supplier ERU Trading LLC.
As stated in a report of the bank, the decision was made by the board of directors on June 9.
“EBRD funds will be used to support growing gas trading operations of ERU Trading in order to secure low cost gas from EU during summer season and store it in Ukrainian gas storages with further sale in Ukraine,” the EBRD said.
According to EBRD, the proposed project supports a private, independent trader in competing with the dominant player, Naftogaz, in an increasingly liberalised market, and facilitates increased liquidity and competition on the private energy exchange UEEX following the MoU signed by the EBRD in July 2020.
The EBRD will become the first international financial institution in the existing loan portfolio of ERU Trading.
ERU Trading LLC, established in 2016, belongs to Yaroslav Mudry and Dale Perry. According to the information on the company’s website, gas supplies to the population are an important part of its strategy. In February of this year, the company received the license from the energy regulator.
EBRD, ELECTRICITY, GAS, LOAN
