Ukraine Suspends All Gas, Coal & Fuel Oil Exports To Meet Internal Demand

Ukraine Suspends All Gas, Coal & Fuel Oil Exports To Meet Internal Demand

On Monday the Ukrainian government announced implementation of a measure halting all its exports of gas, coal and fuel oil, citing disruptions and a domestic supply emergency due to the Russian invasion.

These commodities are now prohibited for export during a time of war, the published government resolution states, which is the result of “the armed aggression of the Russian Federation against Ukraine and the imposition of martial law in Ukraine.”

File image, source: NY Times

Ukraine typically ships small supplies of natural gas across its western frontier for European trading, while also prior to losing its access to Crimea starting in 2014, the International Energy Agency estimated Ukraine had about 9 billion tonnes of oil equivalent in fossil fuel reserves.

Previously, national power grid operator Ukrenergy severed the interconnect from Ukraine to Russia in the wake of the Feb.24 invasion. Ukraine was then quickly connected to the European grid on a hastened emergency bases (which was in the works according to a 2017 deal, but before the war changed plans, it had been set for 2023).

Still, periodic war-related power losses have affected over four million Ukrainian households – though there’s been surprising overall power stability for the rest of the country, given there’s an invasion on.

Starting last week Ukrainian President Vladimir Zelensky forewarned the public and external trade partners that the energy suspension was imminent.

He said on his Telegram channel that his country is suspending all coal and gas exports in preparation for the coming winter, emphasizing that Ukraine must prepare for what looks to be “the most difficult winter during all years of independence.”

“Due to the war, it will indeed be the most difficult winter during all years of independence. During this period, we won’t sell our gas and coal abroad. All domestic production will focus on meeting the internal demand,” Zelensky said.

Separately, Prime Minister Denis Shmygal had earlier announced that coal production in the country’s state-run mines had declined by one third since late February.

Amid the significant wartime energy needs, Kiev has been urging the West and global institutions to make huge infrastructure loans to keep the economy and basic services afloat. As one industry publication reviews of recent efforts, “Ukraine on May 11 and 12 secured €50mn ($52.2mn) of financing from the European Bank for Reconstruction and Development to assist power generators amid the turmoil, as well as to protect food resources for Ukrainian civilians. The money includes existing Ukrenergo financing, and a first loss guarantee from the European Fund for Sustainable Development.”

The report continues: “The gas export ban comes as Ukraine’s national oil company Naftogaz has agreed to purchase LNG and green hydrogen from a Quebec company in an MoU announced June 10. The LNG, from a project that has yet to earn regulatory approval, would likely be delivered indirectly, perhaps via Poland’s Swinoujscie import terminal, given that domestic options have fallen by the wayside.”

Tyler Durden
Mon, 06/13/2022 – 15:27

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