Independents Crucial For Gas Growth

BMI View: Production boosts from smaller independents in Ukraine will help the country mitigate the lack of supply coming from Russia over the second half 2014. That said, without Russia Ukraine will struggle to source sufficient gas to meet the high demand in winter.

Key to Ukraine's detachment from Russian gas dependency will be the success of domestic production efforts. Gas supplies from Russia for consumption in Ukraine were stopped on June 16 due a dispute over unpaid gas bills. Russia is now demanding prepayment for all future natural gas deliveries.

We forecast that Ukraine will be able to cope through the winter of 2014/2015, as long as the government's gas consumption efficiency efforts are adhered to, and the winter is not unusually cold ( see 'Hoping For A Mild Winter', July 15). That said, Gazprom is reportedly putting pressure on European utilities to reduce reverse flows to Ukraine though interconnectors in Poland and Hungary - a key source of natural gas imports with Russian supplies turned off. The Russian gas giant has been vocal in its opposition to reverse flows, denouncing them as 'semi-fraudulent'.

On The Up
Ukraine Natural Gas Production (bcm)

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Related sectors of this article: Oil & Gas, Upstream, Development, Production
Geography: Ukraine

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