The EBA discussed the situation on the gas market with international experts

29/ 07/ 2022

On July 29, the EBA held a discussion with international experts regarding the current situation on the Ukrainian gas market from the international perspective, the heating season, and the situation in the EU. The situation in Ukraines energy sector remains difficult because of Russian military aggression. In particular, on the gas market. Among the factors that currently have the biggest influence on the market, experts single out the following: Closure of part of the information by decision of the regulator, in particular access to registers, information on purchases, etc.; Strengthening of market regulation, manifested in the establishment of a moratorium on tariff increases, a ban on debt collection for the payment of utility services from individual consumers, and a ban on gas exports; Reduction of gas production by 15%; Low liquidity - we have a 30% reduction in payments from individual consumers and 50% from businesses; The growing influence of the state on corporate governance. At the same time, despite the reduction of domestic production, experts estimate its volumes at a satisfactory level. Together with the reduction of industrial demand for gas, these volumes should be enough to get through the heating season. A new gas war with Russia has actually started in Europe. EU countries are entering emergency mode, in particular, a decision was recently made to reduce gas consumption by 15%. One of the reasons for this energy crisis is the high dependence on Russian gas. In general, energy price jumps in recent years have almost always been associated with political events, which only confirms Ukraines thesis that energy cooperation with Russia is unreliable and even dangerous. With this in mind, the EU has a plan to cut consumption by 2/3 by the end of this year, although the success of such a plan remains in doubt. To achieve this goal, the EU will focus on diversification of energy sources, reduction of consumption, energy saving and energy efficiency, and new approaches to regulation. According to climate forecasts, the coming winter promises to be cold. While the situation with the availability of resources is more or less stable, possible blows to the infrastructure and gas storages remain the biggest risk of the passage of the season. Currently, it is difficult to make a long-term forecast as to how the situation will develop, but it is obvious that the winter will be intense in Ukraine and in Europe. At the same time, according to experts, Ukraine should already think about the long-term perspective and the measures that can be implemented now to build a more modern heating system. It is about the reduction of the transport network and the heating infrastructure, which was left over from the Soviet heritage and is currently not used in full, the transition from collective heating to individual heating, the introduction of electric heating, etc. Unfortunately, the current situation on the market jeopardizes the reforms of recent years. It is clear that the state is currently focusing on supporting consumers and in order to survive the winter, at the same time, it is necessary to balance so as not to nullify the positive achievements of previous periods. We sincerely thank the international experts who joined the discussion - Predrag Grujicic from Energy Community Secretariat, Andriy Nesterenko from USAID, Michael Grossmann from Baalbek Management, Olena Pavlenko from DiXI Group. https://youtu.be/GuN1H10YmxY

The situation in Ukraine’s energy sector remains difficult because of Russian military aggression. In particular, on the gas market. Among the factors that currently have the biggest influence on the market, experts single out the following:

Closure of part of the information by decision of the regulator, in particular access to registers, information on purchases, etc.;
Strengthening of market regulation, manifested in the establishment of a moratorium on tariff increases, a ban on debt collection for the payment of utility services from individual consumers, and a ban on gas exports;
Reduction of gas production by 15%;
Low liquidity – we have a 30% reduction in payments from individual consumers and 50% from businesses;
The growing influence of the state on corporate governance.

At the same time, despite the reduction of domestic production, experts estimate its volumes at a satisfactory level. Together with the reduction of industrial demand for gas, these volumes should be enough to get through the heating season.

A new gas war with Russia has actually started in Europe. EU countries are entering emergency mode, in particular, a decision was recently made to reduce gas consumption by 15%. One of the reasons for this energy crisis is the high dependence on Russian gas.

In general, energy price jumps in recent years have almost always been associated with political events, which only confirms Ukraine’s thesis that energy cooperation with Russia is unreliable and even dangerous. With this in mind, the EU has a plan to cut consumption by 2/3 by the end of this year, although the success of such a plan remains in doubt. To achieve this goal, the EU will focus on diversification of energy sources, reduction of consumption, energy saving and energy efficiency, and new approaches to regulation.

According to climate forecasts, the coming winter promises to be cold. While the situation with the availability of resources is more or less stable, possible blows to the infrastructure and gas storages remain the biggest risk of the passage of the season. Currently, it is difficult to make a long-term forecast as to how the situation will develop, but it is obvious that the winter will be intense in Ukraine and in Europe.

At the same time, according to experts, Ukraine should already think about the long-term perspective and the measures that can be implemented now to build a more modern heating system. It is about the reduction of the transport network and the heating infrastructure, which was left over from the Soviet heritage and is currently not used in full, the transition from collective heating to individual heating, the introduction of electric heating, etc.

Unfortunately, the current situation on the market jeopardizes the reforms of recent years. It is clear that the state is currently focusing on supporting consumers and in order to survive the winter, at the same time, it is necessary to balance so as not to nullify the positive achievements of previous periods.

We sincerely thank the international experts who joined the discussion – Predrag Grujicic from Energy Community Secretariat, Andriy Nesterenko from USAID, Michael Grossmann from Baalbek Management, Olena Pavlenko from DiXI Group.