Yamal-Europe Maintenance Boosts Ukraine Transit

Naftogaz Ukrainy is seeing a big boost in transit nominations from Russian pipeline gas export monopoly Gazprom while its northern onshore route, through Belarus, is on maintenance.

The Ukrainian integrated monopoly said April 16 it was "reliably transporting Russian gas to Europe despite the sharp rises in nominations from Gazprom."

Over the past week, the daily volumes have risen by 60mn m³ and are now about 300mn m³/day. That works out at about 110bn m³/year, it said. But it will only be temporary as the reason for the increase is maintenance work on Gazprom’s Yamal-Europe pipeline, which flows into Europe through Belarus.

This situation shows once more how ready the Ukrainian gas transport system is to deliver gas to the European Union, it said.

"Such an abrupt surge in volumes is possible because the Ukrainian pipeline system is properly maintained and managed. For the time being, no other pipeline system can offer such flexibility and reserves of capacity. Gazprom’s determination to avoid this route is not justified by the economics,” said Naftogaz CEO Andrei Kobolev. The Ukrainian system offers flexible and reliable transport of large volumes of gas at competitive rates, he said.

So, Gazprom’s plans to build Nord Stream 2 and other bypass routes have no proper technical or commercial basis: they are purely political in nature. Ukraine can receive about $2.5bn/yr from transiting Gazprom's gas.

Gazprom, a state-controlled entity, argues that it has no obligation to use any particular route, but is free to choose how to transport its gas to Europe, and reliability of supply is part of the equation. It cannot do much at short notice if a problem occurs with the line on Ukraine territory.

Its contract with Ukraine for transiting gas expires at the end of this year and it is in a race against time to complete Nord Stream 2, or face negotiating transit fees on European Union network code conditions.

Only recently the Danish Energy Agency sent Gazprom back to do a third application to build a pipeline through its waters, or a second through its exclusive economic zone, effectively saying it would not approve a line through its territorial waters. However, the rest of the 55bn m³/yr line, to the east and west of Denmark, is already laid.

Gazprom points out that as more of its gas production moves north with the depletion of the major gas fields Yamburg and Urengoi, the Baltic Sea Nord Stream routes are shorter than Ukraine.