Ukraine Disrupts Gas Deliveries to Europe for First Time

Ukraine Disrupts Gas Deliveries to Europe for First Time
Ukraine disrupts gas deliveries to Europe for the first time, declaring force majeure.

Gas flows into Europe from Russia were put under further pressure on Tuesday after a key pipeline in Ukraine was closed, a new market note sent to Rigzone has outlined.

In the note, Rystad Energy analyst Zongqiang Luo highlighted that Ukraine had disrupted gas deliveries to Europe for the first time, declaring force majeure. While alternative pipelines can take a significant amount of the lost capacity, this is another cut in Europe’s ability to import Russian gas, Luo stated in the note.

“Bulgaria and Poland are already cut off from Russian supplies and with the key transit Sokhranivka pipeline now closed, up to a third of Europe’s gas supplies could be disrupted,” Luo said in the note.

“As previously stated, the most realistic scenario of a complete halt in gas exports from Russia to Europe would be if infrastructure were attacked, … this decision is a small preview of what might happen if gas installations are hit by live fire and face the risk of extended downtimes,” Luo added.

“The knock-on effect of removing a further pipeline from Europe’s gas grid and the loss of 10 mcm/d of gas flow per day will make it harder for countries to meet their storage targets and hasten Europe’s plans to move away from imports of Russian gas,” Luo continued.

Luo outlined that, as the European gas grid is well integrated, no one country is likely to suffer any immediate impact, but added that this will put further strain on the system and place a floor on downside price movement.

Sokhranivka Pipeline

The Sokhranivka transit pipeline runs through Russian occupied territory in the east of Ukraine and the daily gas flow via the pipeline averaged about 23 million cubic meters per day in May 2022, Luo highlighted, adding that this figure is 20 percent lower than the flow in the previous month.  

“According to the force majeure statement, GTSOU, which operates Ukraine’s gas sector, cannot carry out operational and technical security at the gas measuring point ‘Sokhranivka’ in the Luhansk region,” Luo stated.

“The lack of stability and safety via the Sokhranivka pipeline means the GTSOU cannot put current transit contracts through the route without risk,” Luo added.

Gazprom will now need to use other pipelines to deliver natural gas to Europe, such as the Sudzha pipeline, which also runs through Ukraine and holds a contracted gas capacity of 77 mcm/d, Luo noted.

“Daily flows via Sudzha have significantly recovered to the same level in Dec 2021 and March 2022, averaging 70 mcm per day in May,” Luo said.

“The contracted gas transit capacity at Sudzha based on the existing transit contract of 77 mcm per day, would allow approximately 7 mcm/d volume addition once the gas flow at Sokhranivka is halted,” Luo added.

“However, based on the historical flow record, another 6 mcm/d on top of that capacity may be added. This leaves 10 mcm/d of gas flow that will still need to be re-directed via other pipeline routes. Where exactly is not clear as capacity is seemingly full,” Luo continued.

In the force majeure statement posted on its website on May 10, GTSOU said it repeatedly informed Gazprom about gas transit threats due to the actions of the Russian-controlled occupation forces and stressed stopping interference in the operation of the facilities.

In a separate statement posted on its website on May 11, GTSOU announced that Gazprom had stopped transporting gas through the GMS Sokhranivka.

Rigzone is currently not able to access Gazprom’s website and has not been able to for some time.

To contact the author, email andreas.exarheas@rigzone.com


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