Ukraine invests in US LNG to meet its rising gas import requirements
The state gas company of Ukraine said that it may import large quantities of U.S. natural gas via terminals located in Germany, Greece and Poland this year, as Kyiv continues to struggle with the effects of Russian attacks against its infrastructure.
The White House is leading the talks to end more than three long years of war following Russia's invasion in Ukraine. Kyiv announced on Tuesday that it would accept a ceasefire offer, but Moscow is yet to agree.
The importation of U.S. natural gas to Ukraine could strengthen the economic relationship between Washington and Ukraine, while the presence of U.S.-produced gas in Ukraine’s storage facilities may deter Russian aggression.
Dmytro Lyppa told an interview that Ukraine could import as much as 4 billion cubic meters of gas from April to October.
Calculations based on average gas prices find that the total import bill would be at minimum $1 billion.
Lyppa stated that up to 50% of the LNG imported through Europe would come from LNG terminals in Europe rather than pipeline gas.
In an interview published on Wednesday, Lyppa stated that "if we look at the political aspect of it, it's better for us to get as much (US LNG) to Poland as possible and bring it gradually to us."
Lyppa stated that the geopolitical environment meant U.S. LNG would be preferable to rival Qatari LNG if only the price difference wasn't significant.
RUSSIAN TRANSIT IS OVER
The Ukraine was the main transit route for Russian Gas until the start of this year when the transit agreement between the two countries expired. This deprived Russia of revenue from transit fees.
Ukraine has also large underground storage facilities for gas. President Volodymyr Zelenskiy stated that Kyiv, the White House and other countries have discussed the possibility of using these sites to store U.S. Liquefied Natural Gas (LNG) which could be used in place of some western European gas upon which Ukraine is dependent.
In recent weeks, Russian forces intensified their attacks on Ukrainian infrastructure (production and underground storage facilities), reducing Ukraine’s gas production. They also limited its ability to remove fuel stored in storage.
Ukraine produced 52-53 millions cubic metres of natural gas per day prior to the recent attacks. However, a senior source in the industry said that the attacks had reduced production by as much as 40%, forcing Kyiv into increasing imports. Officials have refused to provide updated numbers, but some output has been restored.
As temperatures begin to rise and gas consumption starts to decrease, Ukraine will typically start pumping gas in storage for winter 2025-26 when the current peak heating season ends. This is usually around April.
According to energy officials, Ukraine must have 13 bcm in reserves by mid-October to ensure a smooth winter.
Lyppa stated that LNG can be delivered to Ukraine via terminals located in Germany, Greece and Lithuania.
Although the Polish and Lithuanian routes are the cheapest, Lyppa says Ukraine will also need to use other pipes as the Polish interconnector only allows imports of up to 7 millions cubic metres per day compared to a demand of 20-25. The exchange rate is $1 = 0.9158 euro. (Reporting and editing by Barbara Lewis.
(source: Reuters)
