PJSC “UKRTRANSGAZ”
Gas Supply Diversification
Ukraine‘s Case
Anton Kolisnyk, Head of Strategic Planning,
PJSC Ukrtransgaz
23 September 2015
Naftogaz has effectively diversified gas imports…
Sources of imported gas supplies to Ukraine
2013 2014 1H 2015
8%
26%
33%
67%
92% 74%
Russia, single supplier Europe, multiple suppliers
Source: Naftogaz 2
… and achieved substantial price savings
Import Volumes Import Prices
bcm US$/tcm
2.0 500
1.5 425
1.0 350
0.5 275
0.0 200
Oct
July
Aug
Sep
Nov
Dec
Jan
Feb
Mar
Oct
July
Aug
Sep
Nov
Dec
Jan
Feb
Mar
2014 2015 2014 2015
Russia, single supplier Europe, multiple suppliers
Source: Gazprom, public data, Naftogaz analysis 3
Brutal economics of Russian gas supplies to Ukraine
2010-13 2Q14-1Q15
Cost of 18.9bcm
US$/tcm bcm of ımported gas, US$bn
500 45 10
7.5
400 30
5
9.0 3.0
300 15
2.5
2.8
200 0 0
2010 2011 2012 2013 Gazprom demand Actual
Gazprom actual price incl. all “discounts” Payments to Gazprom
Europe, hub price
Payments to EU suppliers
Volumes purchased from Gazprom, rhs
Overpaid US$6.2bn Saved US$3.2bn
Source: Gazprom, public data, Naftogaz analysis 4
Key priorities: energy efficiency, production growth
Gas import requirements by Ukraine
~20
bcm 3-7
bcm
2015 2020F
How can this be achieved?
6-8 bcm
7-9bcm
Energy efficiency Domestic production growth
Required investment*: US$10-15bn Required investment*: US$5-6bn
*Preliminary estimates 5
Selected countries “excess” cost of supply over hub
2014 US$mn
US$mn
590
610 Lithuania
Poland
180
180 Slovakia
30
Hungary Romania 1420
300
Bulgaria
Turkey
Source: Gazprom, public data, Naftogaz analysis 6
Transportation cost of Russian gas by route, from source
Nord Stream Yamal
55 bcm 33 bcm
US$125 US$94
per tcm per tcm
Direct Stream
(Ukraine)
to Europe to Turkey
120 bcm 27 bcm
US$125 US$120
per tcm per tcm
Turkish Stream
to Europe to Turkey
40 bcm 23 bcm
US$220 US$177
per tcm per tcm
Source: Gazprom, public data, Naftogaz analysis 7
Ukraine’s gas network is the missing piece of a puzzle
If Russia cuts off supply through This can be avoided by expanding
Ukraine 8 countries would suffer throughput capacity between
from gas deficit Ukraine and EU
Affected countries:
1. Bosnia Current EU Slovakia (key route)
2. Bulgaria Imports Hungary, Poland
3. Greece (potentially Romania)
4. Hungary
5. Macedonia
EU law enforcement
6. Romania Large
7. Serbia
required;
8. Ukraine Slovak no investment
Reverse Time to implement:
immediately
New Polish Investment:
Inter- EUR0.3bn
connector Time to implement:
2-3 years
Source: ENTSOG, Naftogaz, team analysis 8
Main goals for Ukrainian TSO
- Provide free access to capacity at IP on the border between
Ukraine and EU
- Give opportunity for EU companies to store gas in Ukrainian
UGSF
- Provide possibility to use virtual operations at IP on the border
between Ukraine and EU (backhaul)
- Building of new interconnectors and infrastructure projects
for connections with EU TSOs
Technical capacities of new IP (direction to Ukraine)
mcm per day
UKRAINE
IP Hermanovice
TOTAL
IP Budince 61.1
40
Mediesu Aurit 10
IP Beregdaroc
Orlovka
Region-wide savings can be achieved through cooperation
Possible directions of gas flows
LITHUANIA
Key interconnector blocked by Gazprom
RUSSIA
Gaspool
BELARUS
G ER M ANY RUSSIA
POLAND
NCG
CZECH REP.
UKRAINE
SLOVAKIA
CEGH
A U S T RIA MOLDOVA
RUSSIA
HUNGARY
Existing pipelines LEGEND Russian Unused
Section Capa- Utili--
supply capacity in
ITALY Planned pipelines on city zation
in 2014, 2014,
LNG terminal CROATIA ROMANIA border BCM/year
BCM
in 2014
BCM/year
LNG terminal under construction
BOSNIA UA-RO 21.4 17.5 82% 3.9
Planned LNG terminals HERZEGOVINA
RO-BG 21.3 16.8 79% 4.4
Gas hubs
BG-TR 16.5 12.7 77% 3.8
Gas storages
SERBIA BG-GR 3.8 1.7 45% 2.0
Gas storages under construction BULGARIA
Source: Naftogaz T U RKEY T U RKEY
Possibility of gas supply to Ukraine from South
EU Market
LNG
Opportunities
Solving the issues of documentary blockade at IP and realizing
the projects of interconnectors will fully provide the connection
of Ukrainian gas transmission system with EU countries systems
and will:
- Expand the European gas market
- Create new routes of gas transportation between EU countries
- Increase the security of gas supply
- Give possibility to use Ukrainian underground gas storages
(free capacity 10-15 bcm) with competitive tariff
Thank you for attention
