Ukraine can help in the EU gas price crisis

Foto: Shut­ter­stock, Mykola Tys

Europe is suffering from high gas prices. At some gas hubs, they increased more than 250% since January, and already have impact on the retail prices for house­holds in many EU countries, like France, Italy, Spain. The govern­ments consider multi-billion support packages to soften the blow from the price growth. And the crisis does not look like going to the end – with more cold weather and under­filled gas storages, the prices may stay high during the winter season.

Russian Gazprom and Norwegian Equinor are the major gas suppliers to the EU, covering more than 50% of Europe’s needs. Equinor reacted to the crisis with the plans to boost gas produc­tion and to increase supply to the European countries. The answer from the CEO of Gazprom Alexey Miller was that Asian gas market is more attrac­tive, even with the today’s European gas prices. There should not be any illusions among Europeans that Russia will start saving the EU economy or customers – even if the IEA argues that Gazprom is able to increase gas exports to the EU and help to cover the expected deficit.

It is not only the IEA who believes that Gazprom is able but does not aim to help solving the gas crisis in the EU. More than 40 members of the European Parlia­ment have sent a letter to the European Commis­sion asking to inves­ti­gate possible manip­u­la­tion by Gazprom and potential violation of the EU compe­ti­tion legis­la­tion. The U.S. Energy Secretary Jennifer Granholm noted at one of her briefings that manip­u­la­tions of gas supply might be in place, which demands more unity from the U.S. and the European partners. Although Gazprom insists that it is fulfilling the contracts by 100%, it does not deny that more can be done on its side if there is a political will in place.

Gazprom insists that it increased its exports to the EU to the level “close to the histor­i­cally recorded high”. But closer looks at the gas produc­tion and use of gas export routes show there is still a lot of possi­bil­i­ties to increase gas exports from the Russian side. Although the year 2020 was quite uneasy for Gazprom which produced only 452 bcm of gas (in compar­ison, gas produc­tion in 2019 was 501.2 bcm), the company insisted it produces enough to cover all needs inside the country and outside it. The level of Russian gas exports to Europe (incl. Turkey) varied between 179 bcm in 2020 and 203.9 bcm in 2018, and the expe­ri­ence of 2018 can prove that it should not be a problem for the company to increase gas exports up to 20%.



Moreover, the existing supply routes are still available to rapidly increase gas exports to the EU. While Russia fully uses Nord Stream 1 and Yamal pipelines, the Ukrainian gas transit system still works only with part of its capacity. The system can transit to the EU more than 140 bcm annually – yet, according to the contract signed in 2019, the Russian company is obliged to transit no less than 40 bcm via this route by the end of 2024. Data shows that Ukrainian gas pipelines, despite capacity, are being used on the residual principle, mainly to cover demand peaks, while other pipelines which are controlled by Gazprom are working at their full capacity.



Gas Trans­mis­sion System Operator of Ukraine (GTSOU) regularly reports it is ready to transport more volumes of gas and can increase the transit rapidly, as the system capacity allows it. According to the CEO of GTSOU Sergiy Makogon, Ukraine can solve the gas crisis in the EU through trans­porting more than Nord Stream and Nord Stream 2 combined. The capacity of Ukrainian gas transit pipelines is 146 bcm, while the capacity of both “Nord Streams” is 110 bcm (if exempted from the EU law and utilized in full capacity by Gazprom – which should not be the case). Moreover, gas transit via Ukraine decreased by 13% in 6 months of 2021 year-on-year. Even the fact that GTSOU persis­tently auctioned addi­tional transit capacity, it was Gazprom who ignored this possibility.

Gazprom is already imple­menting the strategy to avoid use of Ukraine gas pipeline system for the future. Although there is a general confir­ma­tion from some Russian politi­cians there might be some volumes transited via Ukraine in the future, such volumes might not be enough to keep the Ukrainian gas system prof­itable. There might be another scenario, when too low transit volumes would make impos­sible for Ukraine to comply with quality standards of transit to the EU at all, and there will be no backup option in case of similar gas crisis in Europe or in case some of Russian pipelines – espe­cially the offshore “streams” which don’t have a possi­bility to quickly reroute gas flows – will stop for main­te­nance or repairs. In that case, the scenarios like the EU meets today could be even more frequent.

Olena Pavlenko is Chair of the PWYP Global Council and President of the DiXi Group, a Kyiv-based think-tank special­ising in research and consul­ta­tions in the energy sphere. 

Olena works in the energy sector for more than 17 years, dealing with such issues as energy security, energy trans­parency, oil and gas market liber­al­i­sa­tion, EU-Ukraine-Russian energy relations, hydro­carbon devel­op­ment issues.

Olena has served as not-on-staff Advisor to the Minister of Foreign Affairs of Ukraine (2019) and to the Minister of Energy (2015–2016).


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