Gas Transmission System Operator of Ukraine LLC (TSO of Ukraine) and Romania’s Transgaz have signed an interconnection agreement meeting European rules to start cooperation from January 1, 2020. The Ukrainian operator recalled that the negotiations with the mediation of the European Commission have been going on for three years. Operators of Bulgaria, Greece and Moldova have also been involved in them.
“This means that all suppliers have the opportunity of freely transporting gas with a new supply route – from Southern Europe and Turkey – through Bulgaria and Romania – to Ukraine and further to Moldova. That is, from January 1, at the Isaccea 1-Orlivka 1 interstate point a daily capacity on the Ukraine-Romania route in the amount of 17.8 million cubic meters will be available, as well as 15.8 million cubic meters per day in the opposite direction,” the operator said.
The first auctions for booking capacities at the Isaccea 1-Orlivka 1 point should be held in the coming days.
The operator said that the agreement previously signed between the gas transmission system operators of Ukraine and Romania did not allow gas to be transported in the reverse mode, and also did not provide European rules for interaction, since such an opportunity was blocked by the current contract between Naftogaz Ukrainy and PJSC Gazprom.
In addition, such an agreement creates an additional technical opportunity for Moldova to alternatively import gas for its own needs from Turkey and Greece if Gazprom stops transit to Europe through Ukraine.
“This decision is historic and extremely important, because it allows you to create an additional route for gas imports to Ukraine, primarily to provide gas to Moldovan consumers and border consumers of Ukraine in Odesa region. This will allow winter to pass uninterruptedly, even if the gas transit could be stopped from the Russian Federation,” Director General of TSO of Ukraine Serhiy Makohon said.
NJSC Naftogaz Ukrainy in 2020 plans to create an exchange to trade with gas, Head of Naftogaz integrated gas business unit Andriy Favorov has said.
“Our idea, our strategy, is that next year we will create an exchange where Naftogaz will act as a buyer and seller of gas,” he said in an exclusive interview with Interfax-Ukraine.
According to him, the decision has already been approved by the board and the supervisory board of the company. The required preparatory work is ongoing to launch the exchange. In particular, a tender was held to implement the ETRM (Energy Trade Risk Management) system, which will take into account all transactions and market fluctuations.
“The introduction of this system will give us the required tools to control commercial risks,” Favorov said.
NJSC Naftogaz Ukrainy has reduced the price of gas for households and heating companies by 13% in December compared with the price in November, to UAH 4,277 per 1,000 cubic meters (excluding VAT, transportation costs and gas sellers’ margins), the company said in a press release.
“Despite the fact that according to the results of exchange trading, the market price of gas in the Ukrainian market did not decrease over the past month, the regulated price in December 2019 decreased in accordance with the declared value of gas cleared in November,” Naftogaz noted.
The company noted that this price level is not market and is determined according to the formula established by the Cabinet of Ministers in its resolution No. 293. In particular, according to the document, the population and heating companies purchase gas at the minimum of four prevailing in the market value: the average import price according to the Ministry of Economic Development and Trade, the price of Naftogaz Ukrainy for industry, the average weighted price at the auctions on the Ukrainian Energy Exchange, PSO under resolution No. 867. This mechanism of social price formation is valid until the end of 2019. From January 1, 2020, in accordance with agreements with the International Monetary Fund, Ukraine will switch to market pricing for household consumers.
Production of natural gas in Ukraine in January-October 2019 decreased 0.4% (by 67.5 million cubic meters, mcm) compared to the same period in 2018, to 17.237 billion cubic meters (bcm), the Ministry of Energy and Environment Protection has reported. According to the ministry, enterprises of NJSC Naftogaz Ukrainy saw 1.6% decline (214.7 mcm) in gas production, to 13.432 bcm. Gas production by PJSC Ukrgazvydobuvannia amounted to 12.459 bcm (2.3% lower from January-October 2018), by PJSC Ukrnafta to 966.8 mcm (8.6% up), and PJSC Chornomornaftogaz – 5.8 mcm (7.9% down).
Other companies increased gas production by 4% year-over-year (by 147.2 mcm), to 3.805 bcm.
Other large gas producers were PrJSC Naftogazvydobuvannia (1.367 bcm), PrJSC Ukrnaftoburinnia (608.42 mcm), ESKO-Pivnich LLC (448.45 mcm), JV Poltava Petroleum Company (222.39 mcm), PrJSC Natural Resources (154.23 mcm), PrJSC Ukrgazvydobutok (132.21 mcm), Regal Petroleum LLC (122.52 mcm), KUB-Gas LLC (111.76 mcm) and PrJSC Davon (82.1 mcm).
As reported, Ukraine in 2018 increased gas production by 0.5%, to 20.898 bcm.
Ukraine in January-November 2019 increased transit of natural gas through its gas transmission system (GTS) by 2.9% (by 2.327 billion cubic meters) compared to the same period in 2018, to 81.494 billion cubic meters, according to recent data from JSC Ukrtransgaz. According to the calculations of the Interfax-Ukraine agency, in particular gas transit through the country to Europe for the 11 months amounted to 78.960 billion cubic meters (3.1% more compared to January-November 2018), to Moldova some 2.534 billion cubic meters (0.9% down).
In November 2019, gas transit rose by 15.4% (by 1.095 billion cubic meters) compared to the same month of 2018, to 8.197 billion cubic meters. In particular, gas transit through Ukraine to Europe amounted to 7.910 billion cubic meters (16.8% more), Moldova some 286.9 million cubic meters (13.1% less).
Ukraine in January-November 2019 increased natural gas imports by 38.1% (by 3.854 billion cubic meters) compared to the same period in 2018, to 13.967 billion cubic meters, according to recent data from JSC Ukrtransgaz. According to the calculations of the Interfax-Ukraine agency, imports from Slovakia amounted to 9.034 billion cubic meters over 11 months (up by 45% compared to January-November 2018), from Hungary to 3.542 billion cubic meters (9.9% more), Poland to 1.931 billion cubic meters (2.1 times more).
In November 2019, imports amounted to 669 million cubic meters of gas, which is 31.1% less than in the same month of 2018 (971.2 million cubic meters).
As reported, Ukraine has not been importing natural gas under the contract with PJSC Gazprom (Russia) for four years (since November 26, 2015), purchasing resources exclusively on its western border.
