Business news from Ukraine


The situation on the European energy market is unable to influence the certification of the Nord Stream 2 operating company as an independent network operator, German Ambassador to Russia Geza Andreas von Geyr said in an interview with Interfax.”The conclusion of the certification process is required for the pipeline to begin commercial operations, irrespective of the situation on the European energy market. We expect Gazprom to continue to fulfil all contractual obligations towards Europe, particularly in relation to gas transit through Ukraine,” von Geyr said.As reported earlier, the German Federal Network Agency started to process the application from the Nord Stream 2 operating company as an independent operator on September 8. The processing has been suspended as Bundesnetzagentur decided that a subject of its regulation could be only a German subsidiary of the Swiss-based Nord Stream 2 AG, which should be the owner and operator of the German part of the pipeline. The Polish company PGNiG and the Ukrainian opponents of the Project, Naftogaz and Gas Transmission System Operator of Ukraine, have received access to the certification process. The application processing deadline has been moved to the middle of 2022, which means Europe cannot count on gas supply through the new pipeline in the winter season of 2021/22.”The certification process for Nord Stream 2 is being conducted by the independent German regulator, the Bundesnetzagentur, in strict accordance with the provisions of the European Gas Directive. Interested parties can raise their views within that legal framework and have their voices heard. Politically, we have made a commitment that this pipeline must not be used to exert pressure on Ukraine. That is why we are campaigning to see reliable, long-term, contractually agreed gas supplies and transit agreements for Ukraine,” von Geyr said.

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Since Moldova did not make its latest payment for gas deliveries on time, i.e. on Monday, November 22, Russia may halt its gas deliveries to Moldova in 48 hours’ time, spokesperson for gas giant Gazprom Sergei Kupriyanov said.”The next payment was due today, on November 22 of this year. In this context, Gazprom notified the Moldovan side today in accordance with the contract that gas deliveries to Moldova may be suspended in 48 hours. Gazprom is extremely disappointed with Moldova’s lack of compliance with its commitments under the contract,” Kupriyanov said.”As you know, Gazprom had been holding negotiations with Moldova on the issue of gas deliveries, on signing a contract to this effect for a long time. Gazprom’s offers regarding this contract, regard the price for gas were absolutely market-based and were formed on the basis of gas market trading. The Moldovan side, however, insisted on price-setting that would be more preferential for it,” he said.”Bearing in mind the complex, quite challenging economic and financial situation of Moldova, seeking to maintain Moldova’s ability to repay its debt to Gazprom, and in line with the position taken by the Russian president, whom the Moldovan side has repeatedly turned to for help, Gazprom adopted a decision to sign a contract effectively on the Moldovan side’s terms, but with a significant and important point that Moldova must timely make 100% of its current payments for gas,” Kupriyanov said.

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Turkey is continuing negotiations with Gazprom on the bulk of contracts for gas supply to the country through the Turk Stream pipeline, Turkish Deputy Energy and Natural Resources Minister Alparslan Bayraktar told reporters.
“We are in talks with Gazprom to increase gas supplies to Turkey because there is a free, uncontracted capacity of 9.75 billion cubic meters of gas in Turk Stream. The contracts expire this year, so there will be such spare capacity in Turk Stream in 2022. We’re talking about new contracts, renewal of some contracts, we are negotiating, I cannot say anything more at this stage,” he said.
He admitted that the situation with Russian gas supplies was complicated by the problem of private importer companies: “The real problem with private importers is arbitration – they offered a discount, then won the arbitration, so private importers suffered.”
“‘Gazprom needs to understand the needs of the domestic market, because today the price of gas is quite important, and it is not easy to increase the price of gas for the population, no one wants to pay more,” the Turkish official added.
“I think Gazprom wants to sell more gas to Turkey, Turkey needs gas, so it’s a ‘perfect alliance.’ Turkey is a growing market, gas consumption is growing, I think Gazprom has the capacity to supply gas to both Turkey and Europe, we have the infrastructure, enough gas pipelines, so I don’t see any problem,” Bayraktar said.
Gas consumption in Turkey is expected to rise to a record 60 billion cubic meters in 2021.
In 2015, Gazprom granted a discount of 10.25% to private Turkish importers, but a year later demanded its cancellation. Claims against Akfel Gaz, Bat Hatt, Kibar Enerji, Avrasya Gaz, and Enerco Enerji were filed with the Arbitration Institute of the Stockholm Chamber of Commerce and arbitration in accordance with UNCITRAL regulations. The arbitration bodies cancelled the discounts for private companies as of January 1, 2017. Failure or difficulty in enforcing the arbitration court ruling in Gazprom’s dispute with Turkish private importers is holding back Russian gas supplies to the country. As a result, some of the former private buyers may not participate in negotiations on new contracts and may be replaced by other importers.
Since the beginning of the 2000s, Turkey has embarked on a liberalization of the natural gas market, under which most of the contracts of state-owned Botas have been reassigned to private importers. However, after a failed coup attempt in 2016, Law N674, “On Measures Under the State of Emergency Regime,” was passed, and external management was imposed on these companies by the state Savings Deposit Insurance Fund (TMSF), which effectively meant nationalization.

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Gazprom (MOEX: GAZP) has declined to book additional transit capacity via Ukraine and Poland for Q1 2022, according to the results of booking auctions on GSA Platform and Regional Booking Platform.
Gazprom has been refraining from long-term bookings this year, preferring mostly monthly contracts.
Liberalization of the European gas market has resulted in the rejection of long-term transit agreements. Transparent auction bookings have replaced the long-term agreements in order to eliminate excess booking costs from the gas price. Consequently, those shipping gas are free to book only their required capacity amount, and for the time when the capacity would be necessary.

Gas Transmission System Operator of Ukraine distributed the proposed capacity along two routes, with 9.8 million cubic meters per day offered at the Sudzha gas-measuring station, and an additional 5.2 million cubic meters per day offered at the Sokhranovka gas-measuring station, though they were unclaimed.
Gazprom has a long-term booking of Ukrainian capacities totaling 40 billion cubic meters, which is 109 million cubic meters per day.

Gazprom also did not book any capacity via the Polish section of the Yamal-Europe gas pipeline for the first quarter of 2022. The 2,000-km Yamal-Europe gas pipeline has the capacity to pump up to 33 billion cubic meters per year. The EuRoPol Gaz joint venture owns Poland’s 683-km section of the pipeline, and the national gas transmission operator Gaz-System operates the pipeline. Gazprom’s long-term contract for transit via Poland ended a year ago, with capacity since then being allocated based on auction bookings. For the gas year from October 2020 to September 2021, Gazprom booked capacity at an annual auction. The company then booked part of the pipeline’s capacities at monthly auctions.

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The price of the nearest (November) futures for TTF on the ICE Futures exchange on Wednesday afternoon reached 161 euros per MWh, or $1,924/1,000 cubic meters, according to exchange data.
Only this morning, the price of November futures topped $1,500/1,000 cubic meters.
All in all, the average value of the day-ahead contract at the TTF hub in the Netherlands, Europe’s main gas platform, was $759/1,000 cubic meters in September.
Europe, with a general shortage of gas supplies (by pipeline and in liquefied form), is being forced to compete for LNG with the premium Asian market.
Gas prices in Europe have recently had had an inextricable impact on Gazprom share prices.

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Gazprom is boosting gas pumping via Ukraine’s gas transmission system and is likely to exceed its contract obligations, but it will not be profitable to increase pumping even further, Russian President Vladimir Putin said during a meeting on the development of the energy sector.
“We are seeing all kinds of speculation on the topic of Ukraine’s gas transmission system, on supplies through it; I would also like to note that here now. Our contact obligations for supplies through Ukraine’s gas transmission system are 40 billion cubic meters of gas per year, and in 9M this year, Gazprom increased these supplies, this pumping, to be more precise, through the Ukrainian transmission system more than 8%. We can say with confidence that we will exceed our contract obligations for gas supplies through the territory of Ukraine. It is unprofitable for Gazprom to increase them further, because it is more expensive. Pumping through the new systems is significantly cheaper, by around $3 billion per year against corresponding supply volumes,” Putin said.

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