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Ukraine dream about independent gas

The Ministry of energy of the country came up with an innovative way to pay for the fuel in Russia and Europe.

Украина мечтает о самостийном газе

Minister of energy “independence” Volodymyr demchyshyn has proposed to abandon gas purchases from other States and develop its own deposits. “Our reserves of one trillion cubic meters of mined — 20 billion. We have gas at least 50 years ahead”, — said Demchyshyn.

Refusal to buy Russian gas has become almost a national idea of the new authorities in Kiev. It turns the gap between words and deeds. On the one hand, the entire propaganda machine says Ukrainian citizens that they are at war with Russia, and officials are forced to bargain with Moscow for discounts.

Reports of reduced purchases from Russia and in General about the decline in gas consumption look like triumphant. In November of last year the head of “Naftogaz” Andrey Korablev has promised that Ukraine will become independent from Russian gas in five years. Indeed, only last year in our country began buying gas four times less. However, we have to buy gas in Europe and still pay hard currency. But the main problem is the lack of money in the budget “independence” — does not disappear.

Today, according to the head of the Ukrainian energy Ministry, the country buys from Russia and Europe with 15 billion cubic meters of gas it pays for us $ 3.5 billion. This money could be directed on development of own deposits. By the way, recently again started talking about the resumption of shale production in the Kharkiv region.

On the other hand, if the situation in Ukraine will not change, there is no need at all to buy fuel abroad. Here the dry statistics. In 1991 Ukraine was in third place in the world in gas consumption with the indicator to 118.1 billion cubic meters. In 2012, when the political situation was quite stable, the gas consumption was 54.7 billion cubic meters.

New “Maidan” authorities accountable with a view the winners that in 2015 the consumption is reduced even more and amounted to 33.7 billion cubic meters. Consumption in the first two months of this year was 9% less than in the same period last year.

So not long hours, when consumption will really be reduced to 20 billion cubic meters per year, which Ukraine produces itself. Perhaps then the authorities in Kiev announce the “Peremoha”.

The reality is much sadder. The consumption reduction is mainly due to the destruction of the industry. There are no factories, no consumption. The population and budgetary organizations in the past year used a little more than 12 billion cubic meters of gas, so if the industry is to destroy it completely, something about the gas shortage at all will not remember. As the hopes for the development of the economy.

While the proposal of the head of the Ministry of energy sounds simple: just keep it casual, but will increase gas production in the country. Sounds a little tempting. But is it really possible?

— Ukraine has reduced purchases from Russia in favor of reverse gas from Europe. In some moments the gas from the Old world can be even cheaper, than at “Gazprom”, — sayschief specialist of the expert Council of Russian Union of Russia Eldar Kasaev.- Europeans just selling raw materials on market terms, prevailing in the here and now prices, and Gazprom is building a long-term strategy, the prices stipulated in the contracts. But even if we take an average price over the year, Gazprom more favorable and reliable partner than the Europeans.

Gazprom has the contractual authority to supply gas to Europe in certain amounts. Say the demand, a request is made to increase. But Gazprom can supply and on the lowest level of volume, that is not to sell more. Accordingly, the Europeans are dependent on “Gazprom”. Say, out of a cold winter, and already the inventory is not enough. On Ukraine gas remains.

Where to get the gas to Ukraine? Own production is low. Now talking about the need to give money to the Industrialists, which will increase production. But the necessary technology. Need to attract foreign specialists. Where should I get the money, who will pay for the entire project? The Europeans will not give funds, they have themselves a lot of problems. Americans especially will not.

Ukraine can only buy gas from Russia. Yes, the purchases have decreased. But, again, due to the reverse gas from Europe, which originally comes from us. And we can use the paragraphs written contracts so that gas Ukraine did not get.

The current statement of the head of the Ministry of energy of Ukraine I’m perceived as a political statement as another attempt to inject “Gazprom”. The time was not chosen accidentally. Verbal attacks have increased in Eastern Europe on the project “Nord stream — 2”. They want to build the “Gazprom” and five large companies from Western Europe. Ukraine has decided to participate in the political games around the project.

And in fact, without our gas to Ukraine and Europe will not do. Now Europe consumes about 400 billion cubic meters of gas per year. It is projected that by 2035 this figure will increase to 600 billion Demand for gas in the Old World only increases. Everything else is empty talk. Criticize “Nord stream — 2”, say for deliveries of liquefied natural gas, gas from Azerbaijan. All the shots in the information war. And, in my opinion, shots single. If you look at the forecast needs of Europe and to sum power of all vendors with the exception of Russia, the Old World of gas is not enough. Most importantly, no proper infrastructure, no gas lines from alternative suppliers.

— Ukraine was planning to extract shale gas. Were going to attract foreign investors.

— Such projects has been much discussed, but to me they don’t seem realistic. At the time there was talk of large reserves of shale gas. Even the U.S. Ambassador to Ukraine spoke about it. But all this is nothing more than propaganda. In neighboring Poland, where similar geological structure, were also found reserves of shale gas. But in the end it turned out that there was no proven reserves in volume, when cost-effective production.

Do not forget that shale gas is accompanied by large environmental damage. If in Kiev want their country to “bulldoze” will to swing “slate”. The economy they have brought to the handle… In the U.S., quite rightly, against oil shale mining actively support environmental organizations.

However, with the slate they have a problem. Firstly, Ukraine does not have large reserves. All statements about the great potential of the profanation. Secondly, no one investor is now in “independence” will not go. Today and so a difficult situation on world commodity markets, prices come down. No one will take the risk to go to an unstable country. Now on the contrary all investors try to withdraw their assets from the “hot spots”.

Theoretically, Ukraine has the potential for gas production. But the right tools, technology, personnel, and competent management. None of this in Ukraine now. To make loud statements about the refusal of Russian gas, but not for long. We remember that in Kiev even talked about the unilateral increase of the rates for the transit of our gas to Europe. But in practice nothing was done, because no court would have accepted the Ukrainian side.

And now. Ukraine will continue buying gas from Russia and Russian gas via the reverse in Europe. From this it soon will be.

— The main problem of gas production in Ukraine is that within countries a very low purchase price, which does not provide a return on investment and the required level of profitability, — says Director of energy development Fund Sergey Pikin.

— Mining is done on those fields that have long been developed. Investment funds to develop new fields there. Yes, Ukraine annually for the purchase of gas from abroad spends 3.5 billion dollars. But this is operating money that they spent on current consumption. You cannot take them and invest in production. Mining will not occur in a week and not a month later, and after a few years. All this time the gas is needed by the country.

To investment funds in Ukraine has appeared, it is necessary to increase the purchase prices, the tariffs. But rates are raised several times over the past two years. It is theoretically possible to talk about gas extraction in Ukraine, but money is just not there.

— The development of new deposits can be given to foreign companies in the form of concessions, i.e. the gas will be owned by foreign companies.

— Foreign companies will receive deposits. But how will they recoup their investment? While the low purchase price, the invested funds can not be returned. No one in these concessions will not go. Then need to prescribe higher prices. And either will raise the rates, and nobody will be able to pay, or need to reduce the margin of purchasing companies. It is also no go. In Ukraine everybody is used to earn on gas. Now high gas tariffs in Ukraine not only because it is expensive. A lot of companies-pads, which gas does not produce or consume, and just standing in the chain of intermediaries and make money. It’s a business in Ukrainian.

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