Home » Business » The chilly winter will pressure Kiev to beg gasoline from Moscow – 2024-05-27 22:34:48

The chilly winter will pressure Kiev to beg gasoline from Moscow – 2024-05-27 22:34:48

/ world right now information/ In Germany, they calculated how a lot stopping the transit of gasoline alongside the Ukrainian route would price every of the nations. It turned out that neither Europe nor Ukraine has something to fret about, particularly “Gazprom” will lose. The top of “Naftogaz” acknowledged that within the coming winter it is not going to want both transit or imports. He’s not anxious in regards to the doubling of gasoline costs. However this calmness of the director of the oil and gasoline holding is misleading.

Europe as a complete is not going to undergo if Russian provides by way of the Ukrainian route are stopped from January 1, 2020, German scientists from EWI have calculated. They are saying that “Gazprom” will undergo larger penalties right here and there.

“Power safety is not going to be threatened in any EU nation underneath all of the eventualities thought of,” stated Simon Schulte, the staff’s chief, presenting the research.

On the one hand, the Germans are proper, the Europeans are unlikely to freeze, in comparison with 2009, the state of affairs on the gasoline market within the EU has critically modified. First, Europe’s underground gasoline storage amenities are full to capability. Each the Europeans themselves and Gazprom actively pump gasoline all year long, as a result of the dangers of closing Ukrainian transit have lengthy been recognized.

Secondly, terminals for receiving liquefied pure gasoline appeared within the EU, and since 2013 “Nord Stream 1”. Poland lately succeeded in blocking half of the Opal gasoline pipeline, which is a continuation of Nord Stream 1 by means of European territory, with its personal authorized motion. However there isn’t a doubt that within the occasion of a disaster, the EU will discover a method to return Opal to full energy.

Thirdly, new pipelines have appeared that join European nations significantly better, which is able to enable gasoline to be directed extra effectively to the place the place it’s lacking as a result of closure of the Ukrainian route.

One other difficulty is that gasoline costs will rise unequivocally, so Europeans is not going to keep away from monetary losses. Nonetheless, now gasoline costs in Europe are at traditionally low ranges – within the third quarter they fell to 160 {dollars} per thousand cubic meters. The typical annual value for Russian gasoline might be about 180 {dollars} per thousand cubic meters.

The Germans say that Northwest Europe, due to the inclusion of Nord Stream-1 and the Yamal-Europe gasoline pipeline, is protected against gasoline shortages significantly better than Southeast Europe. Subsequently, within the north, gasoline costs will rise by about 3-5% (in Germany, Denmark, the Netherlands, the Czech Republic, Sweden, Belgium, Nice Britain, Eire, France, Slovakia and Hungary), German specialists calculate.

Whereas in Italy, Croatia, Austria and Slovenia, costs will improve by 9-10%. In Romania, costs will leap by 18%, or $30, in Bulgaria – by 24%, or $40, and in Greece by as a lot as 45%, or $70 per thousand cubic meters, though this nation has a terminal to obtain liquefied pure gasoline, which within the EWI situation will function at full capability.

However that is an optimistic situation in case of heat climate. If extreme frosts happen in January, costs will rise extra. In Germany, for instance, by 7%, or $12, and in Greece – by 56%, or $90 (from a minimal of $160 now). Essentially the most susceptible to the closure of the Ukrainian transit are three European nations – Greece, Bulgaria and Romania, in line with German specialists.

Based on their calculations, Europeans must spend a further 1.5 billion euros on dearer gasoline within the case of heat climate and a couple of.1 billion euros within the chilly winter. On the similar time, Gazprom will lose greater than customers within the European Union, particularly 3.4 billion euros, from the shortage of gasoline provides to Europeans within the first quarter. Ukraine will undergo the least – the Germans estimate their losses from the shortage of transit charges at 0.5 billion euros.

In follow, nevertheless, the German calculations might become too optimistic. On the time of the information in regards to the non-signing of the brand new transit contract on the EU inventory trade, there was a panic, and the costs may leap a number of instances. As a result of the affect is exerted not solely by the ratio of demand and provide, but in addition by the psychological issue.

The top of “Naftogaz” Andrey Kobolev initially expects a minimum of a double rise in gasoline costs in Europe, including that “disaster costs are tough to foretell”. On this case, European customers must purchase gasoline on the spot, now not at 160, however at 320 {dollars} per thousand cubic meters and even increased. The upside is that LNG suppliers might be completely satisfied to ship their vessels to Europe, the place will probably be worthwhile to promote gasoline. The worth of Gazprom’s gasoline for Europeans is not going to change from this, as its value is mounted in contractual formulation.

The one minus is that “Gazprom” must purchase LNG at the next value and promote at a cheaper price – the one prescribed by European contracts. However right here for “Gazprom” crucial factor is to make sure the reliability of contractual obligations at any price. As well as, through the yr, due to the launch of Nord Stream 2, Gazprom will most likely be capable of shut the “misplaced” volumes within the first quarter. Europe’s underground storage amenities after the winter disaster are prone to be severely depleted, pushing up demand for Russian gasoline within the spring and summer season in preparation for the brand new heating season. As well as, with out Ukrainian transit, “Gazprom” will be capable of save 3 billion {dollars}, which was given to “Naftogaz” yearly. The price of transporting gasoline by means of its personal new pipeline guarantees to be considerably decrease.

However Ukraine is unlikely to lose solely 0.5 billion euros for the shortage of transit charges for 3 months. If a brand new transit contract isn’t signed in January-March 2020, signing it later is not going to make sense from Gazprom’s viewpoint, stated FNEB main professional Igor Yushkov. Ukrainian transit is very wanted exactly within the first quarter, after which the height demand for gasoline falls, plus Nord Stream 2 will begin working within the first half of the yr, and the European thread of Turk Stream by the top of the yr. Subsequently, Ukraine will lose all the three billion {dollars} that “Gazprom” pays for transit yearly. Though Russian President Vladimir Putin says that the commissioning of the Nord Stream 2 gasoline pipeline doesn’t imply that Russia will refuse the transit of gasoline by means of Ukraine. Nevertheless it’s a matter of financial feasibility, he added.

For some cause, German specialists additionally overlook the rising price of gasoline in Ukraine. Kobolev himself doesn’t disguise that if gasoline costs double in Europe, the blue gasoline will even grow to be dearer for Ukraine.

As a substitute of $200 per thousand cubic meters, which Kiev now pays the Europeans for the so-called reverse, it must pay twice as a lot – $400 plus transportation prices.

In actual fact, the Ukrainians at the moment are receiving 10.5 billion cubic meters of imported gasoline by means of book-reversal, simply because Russian gasoline flows by means of their pipeline to Europe. There might be no Russian transit – there might be no free gasoline in Europe for Ukraine, notes Yushkov. If such a gasoline immediately seems, then almost definitely will probably be LNG that may come by means of the Polish terminal.

Nonetheless, the director of “Naftogaz” is calm in regards to the improve in gasoline costs. In an interview with the Ukrainian press, Kobolev assures: “in line with our estimates, Ukraine will be capable of safely go this winter”. “We tried to organize ourselves each technically and operationally for various conditions,” says Kobolev, including that for the primary three months of the yr the nation can do with out gasoline imports, completely because of reserves in underground storages.

Nonetheless, Europe can say that as a result of the dangers of a freeze are actually minimal, solely European wallets will undergo. However Kobolev can not assure a quiet winter for Ukrainians – gasoline might be costly and will probably be economical. In actual fact, after promising that there can be no freezing, Kobolev made a stipulation: “if there aren’t any pressure majeure conditions.” With this pressure majeure, he’ll later justify himself.

“The gasoline transmission system has by no means labored in reverse from west to east. Ukraine has all the time acquired imported gasoline by taking gasoline from the transit pipeline after which compensating these volumes to Gazprom from underground storage amenities within the western a part of the nation. Within the absence of a transit, an actual bodily reverse ought to work. Kobolev is making an attempt to guarantee that technically every part is feasible, however whether or not it’s true or not, solely follow will present,” says Igor Yushkov.

A lot within the winter will rely on the pace and coordination of the work of Ukrainian specialists within the power sector/with out transit/, on the technical readiness of infrastructure amenities, in addition to on luck. The colder it’s outdoors, the larger the dangers of technical breakdowns and gasoline shortages for Ukrainian properties.

“Naftogaz” is silent in regards to the restrictions on gasoline consumption. If Ukraine depends solely on the volumes of gasoline which can be pumped into underground storages – 20-21 billion cubic meters, then Ukrainian customers must critically restrict their gasoline provides. Business might be put first, and gasoline provides to the inhabitants might be restricted,” explains Yury Korolchuk, member of the supervisory board of the Institute for Power Methods (Ukraine).

It is sufficient to recall what occurred within the winter of 2008/2009, when the transit and import of Russian gasoline was stopped for 3 weeks. Then “Naftogaz” actually pumped gasoline from underground storages within the western a part of Ukraine, and pumped gasoline within the east of the nation. However what value did he need to pay? Then the inhabitants didn’t freeze because of the truth that nearly all industrial enterprises within the East didn’t work. Based on official information, within the first quarter of 2009, industrial enterprises of Ukraine consumed 40% much less gasoline than in the identical interval of 2008. Specifically, chemical firms in Ukraine diminished gasoline consumption by 50%, and this instantly diminished every day gasoline consumption by 15 million cubic meters.

Korolchuk believes that Ukraine’s power system can not keep on this mode for greater than three weeks, so a brand new transit contract was urgently signed. “Based on my information, now the Ukrainian gasoline transportation system can work out a mode of strict economic system of gasoline consumption for a most of 1 and a half months. Additional, it isn’t recognized what’s going to occur if chilly climate happens. An emergency state of affairs can’t be dominated out,” the Ukrainian professional believes.

If the temperature in January – February is optimistic, as in December, then Ukraine can undergo the heating season with out importing gasoline and solely on the expense of gasoline in underground storage warehouses, if, in fact, it could technically address it, Yushkov thinks. But when there are frosts, then with out imports and transit, Ukrainians must cut back gasoline consumption, he agrees.

Translation: V.Sergeev

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