Ukraine needs more gas transit for security: Naftogaz
Finding more gas transit capacity bookers is a task of national importance for Ukraine, the head of state Naftogaz Ukrainy Yuri Vitrenko told a television interview June 25. The contract with Gazprom expires at the end of 2024, and is for only a small part of the technical capacity.
The head of the transport company GTSOU, Sergei Makogon, has made a similar plea, saying there was plenty of capacity going spare.
"Not only Gazprom should enjoy the GTSOU's transit services from 2025," Vitrenko said. As well as bringing revenue, transit would reduce the chances of a full-blown war and make Ukraine a more important partner for Europe, he said. Two regions of eastern Ukraine, Donetsk and Luhansk, have been a theatre of war between the two countries since 2014.
Vitrenko said that also that central Asian states could book capacity, as well as companies producing gas in Russia and European gas buyers.
"If Putin were tell all these 100, 59 or 10 bookers to stop shipping gas, then the German government could no longer say that North Stream 2 is simply a commercial project. It will be clear to everyone that it is a political decision, which limits the volume of Russian gas to Europe. This is a violation of the European anti-trust law. The European regulator will be able to sanction Gazprom as a member of a cartel conspiracy," he said.
He said that the suggestion of a simple extension of the present transit contract with Gazprom to offset the launch of NS 2 would be extremely risky for Ukraine. If Gazprom builds NS 2 and no longer needs Ukrainian transit, but there is a ship-or-pay contract, there is a risk that Gazprom will seek arbitration – "just as we did with gas purchasing," he said.
Rosneft, BP and other producers in Russia have long wanted an outlet into Europe for some of their gas, but pipeline exports have always been a state controlled monopoly either of the gas ministry or of its successor Gazprom. By the same logic, Gazprom has also blocked access to its system from central Asian states.
Gazprom's refusal to book more transit capacity this year through Ukraine than it agreed to in late 2019 has upset Ukraine and surprised European gas traders. With very low inventories and high demand for gas in Asia, there are fears of very high prices in Europe next winter. Most Asian gas deliveries are sold on oil indexation terms, with Anglo-Dutch Shell a year or so ago putting its own proportion at 80% oil, 20% spot.
Summer gas prices have been surging at Europe's benchmark hub, the Dutch Title Transfer Facility, as Asian demand has pushed prices even higher,