Neue Zürcher Zeitung (Switzerland)
Andreas Umland , Anatoly Amelin, Andrian Prokip
Ukraine was once a European breadbasket, and its resurgent agriculture has great potential. However, few people know that this large country also has significant gas resources. And they can make serious changes to the market situation
The ongoing confrontation and negotiations over various routes for Russian gas supplies to the EU distract attention from the economic potential of Ukraine’s gas reserves, gas storage facilities, and biogas resources. If we consider the huge natural gas reserves in the Asian territory of Russia to be non-European, we can say that Ukraine currently has the second largest proven gas reserves in Europe. At the end of 2019, they amounted to 1.09 trillion cubic meters. Among the countries of the Old World, only Norway has more: 1.53 trillion “cubes”.
Undiscovered gas fields
Nevertheless, the huge energy reserves that are hidden in the Ukrainian subsoil, for the most part, remain unclaimed. Ukraine consumes only about 2% of its own proven reserves. In addition, more intensive exploration of unknown deposits can significantly increase this figure.
For the EU, cooperation with a new energy partner could be very useful.
Before the coronavirus outbreak, the average gas consumption in Ukraine was about 32 billion cubic meters per year. Of these, about 10 billion cubic meters were covered by imports from year to year. If you compare these volumes with the above-mentioned figures, it is easy to see that in the future there is a possibility of a real revolution in the Ukrainian energy sector.
The European Union, according to its own estimates, will have to import up to 90% of all gas it consumes by 2030. For this reason, Brussels will seek to diversify its sources and routes of supply of “blue fuel”in the next decade. With this in mind, the EU may also be interested in small gas exporters that already exist or will appear in the future — and Ukraine is one of them. Its supplies may well reduce the EU’s dependence on the dominant gas market participants and strengthen the position of Brussels in negotiations with them.
In recent years, Ukraine, largely under pressure from the International monetary Fund, has reduced the scale of state intervention in the domestic gas market. Kiev introduced market prices for gas for the population and refused to subsidize all private households without exception. This new, more economically stable situation in the energy sector may help attract foreign and, in fact, Ukrainian investment in the development of new fields compared to previous years. This will once again improve the investment climate, when the global victory over the covid-19 virus from 2021 will allow the situation in the European energy markets to stabilize.
Extensive infrastructure
Ukraine has one of the most developed and extensive infrastructures for gas transportation, whether for the purpose of providing the domestic market or for transit abroad. The huge gas transportation system is a legacy of the Soviet Union’s energy expansion into Europe and the “new Eastern policy” of the then — Federal Republic of Germany in the 1970s.
Another important element of Ukraine’s vast gas infrastructure is its vast gas storage facilities. Their total volume, which is currently only partially used, is more than 31 billion cubic meters. Thus, Ukraine may well add almost a third to the current total reserves of all EU member States (about 100 billion cubic meters). In the first nine months of this year, international energy companies pumped 7.9 billion cubic meters of gas into Ukraine for storage. This is already much higher than the amount of foreign gas that was stored on Ukrainian territory throughout 2019.
Another form of gas with great potential that Ukraine has is biogas. Currently, the country has the capacity to produce about 10 billion cubic meters of biogas per year. This is roughly equivalent to the amount of natural gas imported by the country each year. Taking into account the current growth of the Ukrainian agricultural sector, the volume of biogas production may grow even more. When biogas is mixed with hydrogen, biomethane is obtained — a very environmentally friendly energy carrier.
The growth of natural gas, biogas, and biomethane production could contribute not only to reducing, but also to completely overcoming Ukraine’s dependence on energy imports. This would create a new export-oriented sector of the economy that could boost the growth of other industrial sectors. The EU, in turn, could benefit greatly from cooperation with a new energy partner, especially since it is its immediate neighbor.
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Andreas Umland , Anatoly Amelin, Andrian Prokip
Ukraine was once a European breadbasket, and its resurgent agriculture has great potential. However, few people know that this large country also has significant gas resources. And they can make serious changes to the market situation.
The ongoing confrontation and negotiations over various routes for Russian gas supplies to the EU distract attention from the economic potential of Ukraine’s gas reserves, gas storage facilities, and biogas resources. If we consider the huge natural gas reserves in the Asian territory of Russia to be non-European, we can say that Ukraine currently has the second largest proven gas reserves in Europe. At the end of 2019, they amounted to 1.09 trillion cubic meters. Among the countries of the Old World, only Norway has more: 1.53 trillion “cubes”.
Undiscovered gas fields
Nevertheless, the huge energy reserves that are hidden in the Ukrainian subsoil, for the most part, remain unclaimed. Ukraine consumes only about 2% of its own proven reserves. In addition, more intensive exploration of unknown deposits can significantly increase this figure.
For the EU, cooperation with a new energy partner could be very useful.
Before the coronavirus outbreak, the average gas consumption in Ukraine was about 32 billion cubic meters per year. Of these, about 10 billion cubic meters were covered by imports from year to year. If you compare these volumes with the above-mentioned figures, it is easy to see that in the future there is a possibility of a real revolution in the Ukrainian energy sector.
The European Union, according to its own estimates, will have to import up to 90% of all gas it consumes by 2030. For this reason, Brussels will seek to diversify its sources and routes of supply of “blue fuel”in the next decade. With this in mind, the EU may also be interested in small gas exporters that already exist or will appear in the future — and Ukraine is one of them. Its supplies may well reduce the EU’s dependence on the dominant gas market participants and strengthen the position of Brussels in negotiations with them.
In recent years, Ukraine, largely under pressure from the International monetary Fund, has reduced the scale of state intervention in the domestic gas market. Kiev introduced market prices for gas for the population and refused to subsidize all private households without exception. This new, more economically stable situation in the energy sector may help attract foreign and, in fact, Ukrainian investment in the development of new fields compared to previous years. This will once again improve the investment climate, when the global victory over the covid-19 virus from 2021 will allow the situation in the European energy markets to stabilize.
Extensive infrastructure
Ukraine has one of the most developed and extensive infrastructures for gas transportation, whether for the purpose of providing the domestic market or for transit abroad. The huge gas transportation system is a legacy of the Soviet Union’s energy expansion into Europe and the “new Eastern policy” of the then — Federal Republic of Germany in the 1970s.
Another important element of Ukraine’s vast gas infrastructure is its vast gas storage facilities. Their total volume, which is currently only partially used, is more than 31 billion cubic meters. Thus, Ukraine may well add almost a third to the current total reserves of all EU member States (about 100 billion cubic meters). In the first nine months of this year, international energy companies pumped 7.9 billion cubic meters of gas into Ukraine for storage. This is already much higher than the amount of foreign gas that was stored on Ukrainian territory throughout 2019.
Another form of gas with great potential that Ukraine has is biogas. Currently, the country has the capacity to produce about 10 billion cubic meters of biogas per year. This is roughly equivalent to the amount of natural gas imported by the country each year. Taking into account the current growth of the Ukrainian agricultural sector, the volume of biogas production may grow even more. When biogas is mixed with hydrogen, biomethane is obtained — a very environmentally friendly energy carrier.
The growth of natural gas, biogas, and biomethane production could contribute not only to reducing, but also to completely overcoming Ukraine’s dependence on energy imports. This would create a new export-oriented sector of the economy that could boost the growth of other industrial sectors. The EU, in turn, could benefit greatly from cooperation with a new energy partner, especially since it is its immediate neighbor.