Ukraine Cuts Demand, Maintains Transit
Ukraine’s gas transmission system (GTS) was fully functional on March 3 and transiting Russian gas after the gas monopoly Naftogaz Ukrainy sourced gas from elsewhere, including Poland.
Russian monopoly Gazprom was to have supplied 18mn m³/day that Ukraine had pre-paid as from March 1 but, following an adverse arbitration ruling from Stockholm, the company's CEO Alexei Miller said March 2 it would immediately cancel the transit and gas supply contracts: "The continuation of contracts for Gazprom is economically unprofitable. Gazprom will start the procedure of immediate termination of contracts with Naftogaz of Ukraine for the supply and transit of gas in the Stockholm Arbitration."
Naftogaz said March 3 it had not received any documents from Gazprom regarding the Russian energy giant’s intention to terminate existing gas supply and transit contracts with Ukraine. These agreements remain effective and do not allow for unilateral termination although Gazprom has not regularly maintained the contractual pipeline pressure at the border for the past five years, according to data supplied by Naftogaz, .
Naftogaz said it "welcomes the suggestion by the Ukrainian foreign ministry and the European Commission to hold trilateral Ukraine-Russia-EU talks regarding the implementation of Stockholm arbitration awards. The company is ready to enter into negotiations as soon as convenient for all parties."
The government in Kiev also successfully appealed to the country to turn down domestic and some commercial boilers. The #Coolitdown initiative enabled a 14% cut in demand in Ukraine's major cities on March 2 compared with March 1, Naftogaz said, and has asked for it to be extended until March 6.
Ukraine transited 264mn m³ to Europe, including Moldova, on March 1, 265mn m³ March 2, and 264mn m³ March 3, according to recent reports. But Gazprom failed to deliver to Naftogaz the prepaid 18mn m³/day of gas. This shortfall put gas supplies to Ukrainian consumers at risk.
“Maintaining secure transit is a top priority for us. I would like to thank the Ukrtransgaz team for maintaining the uninterrupted operation of Ukraine’s gas transit system under extreme conditions. Ukraine has not taken a single cubic meter of transit gas despite the critical situation caused by Gazprom,” said Naftogaz CEO Andriy Kobolyev.
Naftogaz chief commercial officer Yuriy Vitrenko said Gazprom’s latest actions showed that Naftogaz was correct to warn the European community over Russia’s use of gas supplies as a geopolitical weapon: “We hope that now it is more clear to the EU that it is a bad idea to build Nord Stream 2 or any other new 'streams' with Gazprom."