The head of Ukraine’s state gas company Naftogaz expects deliveries to stop on January 1, 2020.
Winter is coming and it promises to be bleak for Ukraine as Russia is clearly preparing to cut its neighbour out of its gas transit system completely. In an exclusive interview with bne IntelliNews the executive director of Ukraine’s national gas company Naftogaz, Yuriy Vitrenko, says that the company’s base-case scenario is that all deliveries of Russian gas, including the transit gas to Russia’s European customers via Ukraine, will cease on January 1, 2020....MUCH MORE
And Russia is preparing to cut Ukraine off even if the controversial Nord Stream 2 pipeline is delayed or blocked altogether. Nord Stream 2 will add an extra 55 billion cubic metres (bcm) to Russia’s pipelines running to Europe that can replace most of the 65bcm that travels through Ukraine each winter.
If Russia does cut Ukraine off before Nord Stream 2 is ready then it will have to reduce its deliveries to its contracted minimums and even then there will probably be a shortfall, says Vitrenko. That means Europe can look forward to a deficit of gas on the market, and soaring prices. For Ukraine the outlook is even bleaker as it may end up with no gas imports at all from either its eastern or western border and it will have to reverse the flow in its domestic pipelines to pump gas from western storage tanks to supply the northern regions. Last time it tried that in 2009, the system nearly collapsed.
All this could be avoided if Russia and Ukraine can come to some compromise. The existing gas supply and transit deal will expire at the end of this year, and before a new deal can be signed disputes over the old one need to be resolved. But here too talks are fraught and the legal writs are flying.
The Stockholm arbitration court’s decision in December 2018 ordered Gazprom to pay compensation of $2.6 billion to Naftogaz, which the Russian company has refused to do. With interest, the amount the Russians owe is now $2.8 billion and Ukraine has begun the process of trying to seize Gazprom assets in European countries in lieu of payment....
