Sunday, July 14, 2024
HomeOil & GasA regional gas hub in CEE? Experts discuss Ukraine's future energy landscape...
Powered by

A regional gas hub in CEE? Experts discuss Ukraine’s future energy landscape at Energy Security Forum

Day 3 of the Energy Security Forum, organised by the Ukrainian Energy Club, saw an expert debate on the prospect of establishing a regional ‘Eastern European’ gas hub and the potential benefits for Europe and Ukraine.

Kicking off the discussion, the Deputy Minister of Energy of Ukraine, Mykola Kolisnyk, highlighted his country’s eagerness and ambitions to engage in new and existing initiatives with Europe. The Deputy Minister said that market coupling is an important aspect in the future, highlighting Ukraine’s significant progress in implementing European directives and market rules, particularly in comparison to other European neighbourhood countries. However, he noted that his country does not have 100 per cent of metering and provided reassurance that Ukraine ‘understands the homework’ concerning the internal market reforms.

On the future regulatory landscape of Ukraine, Deputy Minister Kolisnyk said that there is an initiative to incorporate additional entry points, which would provide additional services between Ukraine and Europe and make gas exchange trading options more flexible.

Short-term challenges: War and Gazprom’s energy blackmail – and long-term objectives towards an ‘Eastern European’ energy hub

Mr Kolisnyk believes that the energy blackmail by Gazprom will continue, and in his view, this means that Ukraine needs a new outlook on the internal gas market structure, especially gas infrastructure. As part of this, the Deputy Minister proposed optimising existing infrastructure and moving towards a more ‘economically-efficient’ model. Another speaker, Willem Coppoolse, Director of the Energy Resources of Ukraine, said that the Russian transit may end, potentially in January. However, he added that the country’s energy sector has or is in the process of preparing for such a scenario.

In terms of the impact of the war, Mr Kolisnyk said: “the structural consumption of natural gas due to the war is reconstructed, quite strongly”. Adding: “We understand that we are in a new reality regarding the consumption structure and the infrastructure which is needed to send these volumes to the end users”. He noted that ‘a lot of homework needs to be done’, however, it needs to be done in line with EU standards and initiatives such as RePowerEU.

Looking towards the future of the prospect of establishing a new ‘gas hub’ in the CEE region, Roman Storozhev, the President of the Subsoil Users of Ukraine Association, names key areas that ought to be further developed:

  • Completing the inter-connectors with the related operators, which would increase trade capacities and enable access to new transportation routes;
  • Promoting the Ukrainian GTS as a ‘peak load balancing system’ for Europe, thanks to the presence of powerful transport capabilities and large free natural gas storage capacities, as it was partly achieved 2 years ago.
  • Activating the implementation of bio-methane gas projects for the export of the product to the EU with the assistance of the Ukrainian Government and European Commission.
  • Developing a highly liquid trading platform for natural gas trading, which would create a Ukrainian gas index.
  • Constructing terminal and port facility for future LNG deliveries, with Odesa as a potential region for such a development.

What benefits can Ukraine offer to the European market?

Artem Kompan, the Chairman of the Board of the Association of Energy Suppliers, highlighted Ukraine’s large reserves of natural gas, with a capacity to export 2-3 billion cubic metres annually in the near future. However, progress must be made in the country’s energy efficiency program, and in the development of gas production, which can provide more preferences to gas production companies and investors.

In addition, Mr Kompan mentioned that Ukraine has the largest storage facility in Europe, with a storage capacity of up to 30 billion cubic metres. He added that today, Ukraine can provide energy storage services to European gas traders with an annual capacity of 10-15 billion cubic metres.

In terms of commercial interest in a ‘gas hub’, the President of the Subsoil Users of Ukraine Association said: “In today’s realities, it is rather difficult to predict any prospects, however, as market participants, we have always been interested in the prospect of creating a gas hub in Ukraine, it would probably really be correct to call it an Eastern European gas hub”.

Moreover, Mr Storozhev took the opportunity to demonstrate the benefits of the Ukrainian energy system. Firstly, he emphasised that the Ukrainian gas transmission system is ‘one of the largest and most extensive in Europe’, highlighting its balance, stability and capacity to solve the ‘most complex technical problem’ in the shortest possible period.

Touching on Ukraine’s progress in the regulatory landscape, Mr Storozhev added that the system operator meets almost all the requirements of European standards. Further, he mentioned that the operator offers a variety of service packages for the sale of standardised trading products at ‘competitive rates’.

Mr Storozhev also supplemented Mr Kompan’s insights into Ukraine’s energy storage infrastructure, as he highlighted that the country has one of the largest storage facilities on the continent. Mr Storozhev also said that the Ukrainian gas storage operator offers storage services to residents and non-residents including a custom warehouse service, offering competitive tariff rates which are among the lowest in Europe.

Sign up for our newsletters

    Monthly newsletter – Delivering the most important energy stories of the month selected by our Editor-in-chief
    Weekly Oil&Gas roundup - All major news about the oil and gas industry, LNG developments, the upscaling of new gases and related EU regulations arriving in your mailbox every Monday.
    Weekly Renewables&Climate roundup - All major news about investments in renewable energy sources, environment protection, green hydrogen and new innovative ways to tackle the climate crisis arriving in your mailbox every Tuesday.

    Most Popular