Poor pipes

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The GTS Operator of Ukraine company reported on the transit of Russian gas in the first quarter of 2021. Another anti-record has been set. But only for Ukraine. On the whole, Gazprom increased its export deliveries by 30.7%.

During the period from January to March, Gazprom sent 10.4 billion cubic meters of gas through Ukraine. m. Thus, last year’s anti-record was broken, when only 11.1 billion cubic meters were pumped along the same route in the first quarter. m.

It is important that the nature of these anti-records is different. So, last year the drop in pumping in the Ukrainian direction was caused by the problems of the European gas market. Some of them were associated with an oversupply of reserves in underground storage facilities (UGS) accumulated, which is ironic, in the event of a breakdown of the transit agreement between Russia and Ukraine. Plus, the warm winter made its contribution. Even before the start of the full-scale coronacrisis, gas prices in the European Union managed to collapse below $ 100 per 1,000 cubic meters. m. Against this background, it would be absurd to increase pipeline supplies.

By 2021, the EU has accumulated comparable stocks in storage facilities. But the local European oversupply has disappeared, which in 2019-2020 was generated by the specific situation on the world gas markets. In other words, LNG suppliers again mainly transported blue fuel to the place where they give more money for it – to the Asia-Pacific region (Japan, China and South Korea). In addition, the winter was cold and relatively calm. Because of this, the rate of gas extraction turned out to be record-breaking: it was necessary to produce heat and replace the volumes of “green” electricity that had fallen out by the will of the weather.

Europe came out of the heating season with well-emptied UGS facilities. And Gazprom, according to preliminary data, exported 52.7 billion cubic meters in the first quarter. m – by 12.4 billion cubic meters. m more than in the same period a year earlier. But at the same time, supplies to the Ukrainian direction fell. This was expected.

In the current contract from 2021, Gazprom is obliged to pump only 40 billion cubic meters through Ukraine. m (last year – 65 billion cubic meters). But since the volume is calculated not in annual terms, but in daily terms, it would be more accurate to say that it is obliged to supply 110 million cubic meters. m per day. That is, the record low transit volumes were about 5% higher than the contract anticipated.

If the Russian side supplies more than stipulated in the contract, transit is paid taking into account a multiplying factor (from 1.1 to 1.4, depending on the period for booking capacities). In this regard, it should be noted that the distribution of pumping through Ukraine in the first quarter was uneven. With the depletion of European reserves and growth in demand due to the cold snap, the Ukrainian direction began to be exploited more actively. Thus, according to the Ukrainian GTS Operator, in March Gazprom sent 27% more gas through Ukraine than in February – 3.69 billion cubic meters. m. At the same time, the Russian side booked an additional 2.115 billion cubic meters. m, bringing the total volume of reserved transit capacities to about 12 billion cubic meters. m.

Interestingly, the bulk of the transit was carried out in the direction of Slovakia – about 6 billion cubic meters. m. 2 billion cubic meters were pumped to Hungary. m, to Moldova – 1.1 billion cubic meters. m, to Poland – 863 million cubic meters. m, and to Romania – 394 million cubic meters. m. Actually, the low load on the once extremely important southern direction testifies to a rather obvious thing – the Turkish Stream is working.

After Russia’s partners launched the Balkan continuation of the Turkish Stream at the end of last year, an additional drop in pumping to the south through Ukraine was inevitable. And recently Romania began to receive Russian blue fuel through Turkey.

Another factor influencing the loading of the Ukrainian “pipe” is the demand on the territory of this country. About Russian 10-12 billion cubic meters. m, pumped through its GTS, since 2016 magically turned into gas produced in Slovakia, Switzerland and other powerful oil and gas powers. Special legal magic.

In 2020, gas demand from Ukraine decreased by 2.7 billion cubic meters. m. The consumption of both the population and the industry dropped to an equal extent. At the beginning of this year, a cold winter spurred demand. For example, in February, the best result over the past eight years was established – 3 billion cubic meters. m. But a significant part of this volume was extracted from Ukrainian underground storage facilities.

In general, the decline in the Ukrainian economy continues. Additional pressure on it is exerted by the inconsistent anti-epidemiological policy of the state. At the same time, the population continues to grow poorer, build up debts for energy resources and refuse gas. Therefore, in annual terms, the import of blue fuel from Ukraine may be at the level of 2020, or even lower.

After the launch of Nord Stream 2, the need for the Ukrainian direction will decrease. But at the same time, it can be used as an alternative to pumping through Poland. If the conditions are favorable. Also, the Ukrainian direction may turn out to be in demand after 2024, at least at the current level, if the demand for gas in the European Union remains, and its own production continues to fall. But even in this case, we can say unequivocally: the time has come for the Ukrainian gas transportation system of anti-records.

Author – Deputy Director General of the Institute of National Energy

The editorial position may not coincide with the opinion of the author