March 4, 2018

Will Father Frost Help Gazprom?

Bohdan Sokolovskyi

After the Russian Federation's aggression against the Ukrainian Crimea and Donbas, the Russian politico-gas concern “Gazprom”'s statements (like the day before yesterday's one on returning Ukraine the prepayment and refusal to supply gas to it, as well as yesterday's — on the intention to terminate unilaterally the contracts for the gas supply to Ukraine and the transit of gas through Ukraine) cannot come as a surprise.

In fairness it must be said that so far it is all about the intention to break contracts. The final decision is to be taken by the Stockholm arbitration.

In regards to transit, for example, there are three parties to the process: the Russian Federation (the supplier), the EU (the consumer) and Ukraine as the transit agent. Until now, neither party has recorded any violations or force majeure circumstances.

The same can be said about the implementation of the contract for the supply of Russian gas to Ukraine. In particular, after the verdict of the Stockholm arbitration. There were no official warnings or actus Dei on this subject.

Consequently, the above-mentioned intentions do not have any judicial perspective.

So, given the fact what today is known about the intentions of the Russian side on the gas issue, such statements look at least strange. And it is hard to escape the conclusion that they can adequately be scoped out only by a psychiatrist. However, their full-fledged professional analysis is possible only when there is enough information on Gazprom's specific actions.

Obviously, the Russian side counted on a cold snap in Ukraine and in Europe, when the daily gas consumption is increasing significantly. And it did not hesitate to once again demonstrate its cynicism and cruelty.

But soon, in March, the temperatures will rise. The Stockholm Tribunal will not be able to consider these issues at least before warm weather settles, etc. That is, we and Europe will survive! Luckily, this did not happen, for example, in January. Nevertheless, the negative image of Russian Gazprom as an unreliable gas supplier will be remembered.

To a certain extent, this is in our favor, as it will be a strong argument against the implementation of the project “North Stream 2”. That is, Gazprom has “played” into our hands.

On the other hand, the above-mentioned behavior of the Russian side has demonstrated that we are not ready to guarantee independence from Russian gas. And now it is very difficult to objectively find out who and what is to be blamed for this, in particular, taking into consideration hustle about the change of command of the “Naftogaz of Ukraine” company and so on.

For several years we were happy that we would not buy Russian gas. We established a reverse delivery of it. We boasted of reducing consumption volumes, without going into details about why this was happening, and so on. And were doing nothing to really get rid of Ukraine's dependence on supplies of Russian gas at the peak of needs for it: there was no elementary professional analysis of the real condition, the problem of preventing potential threats were not resolved, etc.

Results of the Ukrainian GTS last year
Results of the Ukrainian GTS last year

The matter is that the Ukrainian GTS was designed as part of the former Soviet GTS. In the Soviet GTS, the peak, daily consumption of gas at a time of significant decrease in temperature in the Ukrainian SSR was technically resolved at the expense of supplies from the RSFSR. In fact, nothing has changed.

The obvious positive thing is that now Ukraine's annual consumption of gas is provided in the form of its own production and import from the West — from Slovakia, Hungary, Poland — instead of Russia. That is, nowadays, in order to ensure day-to-day consumption, in addition to the two methods, the UGS is used. Thus, now the daily gas consumption in Ukraine includes: our own production, “lifting” from UGS and import from the West (as it has just been mentioned, instead of the gas from the Russian Federation).

However, the maximum amount of consumption (for a significant decrease in temperature) is lower than that allowed by the design of the Soviet GTS — due to the fact that the technical possibilities of daily gas supplies from the West are smaller than those from the Russian Federation. And the volumes of “lifting” of gas from the UGS and the volume of own production are limited — they actually do not differ from those that were at the time of construction of the GTS.

To resolve the issue of technical support for daily gas consumption in the situation of the above-mentioned scheme of stopping gas supplies from the Russian Federation is quite realistic. For this purpose, we should first of all to take into account the opinion of experts, in particular, from the state, from the gas and financial spheres.

We resolved the issue of annual volumes of gas consumption at the expense of the reverse. And ignored the issue of daily consumption in cold weather — at best, relying on sheer luck. The worst thing is that such threats were known a few years ago. Were known! But not realized.

In other words, based on the experience of these days (to be fair, it is worth pointing out that this year's cold spell is comparatively the worst), Ukraine has resolved the issue of annual volumes of gas consumption without Russia, but neglected the daily volume of gas consumption in severe frosts, which are no surprise for our state. As a result, we have demonstrated to the world the most shameful way to reduce the daily consumption of gas — by closing educational institutions, etc.

 

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