weekly analytical report: january 28 - february 3, 2013
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Weekly analytical report: January 28 - February 3, 2013TRANSCRIPT
DiXi Group, 2013
Energy information ● Analysis ● Consulting
www.ua-energy.org/en
Weekly analytical report January 28 – February 3, 2013
1. The EU countries analyze the conditions of constructing new nuclear power plants. While European Parliament strenghtens regulation of nuclear energy, low voter turnout at the referendum in Bulgaria means returning the issue of building the new NPP back to the parliament. Meanwhile, Estonia is ready to support the Visaginas NPP if the project will be economically feasible. At the same time, South Korea is preparing to the announced nuclear test in North Korea, and Iran informed about increased capacities to enrich uranium. 2. While European countries search for new sources of gas supply, Gazprom calculates the cost of its pipeline projects. By the end of the year, Bulgaria plans to sign an agreement with Azerbaijan on gas supplies from the Shah Deniz field, the development of which was continued by Azerbaijan. Romania permitted Chevron to explore shale gas. Gazprom has estimated that the cost of investment in the bypassing pipelines amounted to 40 bln USD, in particular 600 mln USD (according to the media) can be invested in Hungary. 3. The Ukrainian government has no coherent position on the gas bill from Russia. Gazprom has sent to Naftogaz NJSC a 7 bln USD bill for unused gas, and the Ukrainian company confirmed this fact. The authorities have no single response to this issue: while the Presidential Administration refused to comment as it didn’t see the bill, Minister L. Kozhara said that Ukraine will not pay the bill and Russia risks to lose the Ukrainian market, Minister O.Lavrynovych hopes to avoid court hearings with Gazprom, Minister E.Stavytskyi said that Ukraine has fulfilled its obligations. The Prime Minister M.Azarov compared the sum with the payment of pensions for a quarter. Commenting on the situation, the European Commission expressed its hope that the conflict will not affect gas supply. Fitch agency warned Naftogaz about the possible reduction of its positions if it agrees with the bill. The conflict produced a number of interpretations: Russian political analysts believe the Gazprom bill is for the debt of businessman D.Firtash and argue about the possibility of suspending transit. Ukrainian experts consider the bill a revenge for the agreement with Shell, stress that Ukraine has fulfilled all the obligations and suggest Naftogaz to file a lawsuit first. International experts are surprised by the size of sanctions against Ukraine and predict that negotiations with the IMF will be more complicated. Gazprom does not publicly comment on the situation. In the end of the week, Naftogaz has responded to the Gazprom’s claim, but has left its position unclear by not making the response public. 4. Responding to the conflict with Gazprom, the Ukrainian government has activated possible diversification projects: reverse supply of European gas, supply of Turkmen gas and increased domestic production. M.Azarov said it’s cheaper to buy gas in Europe,
DiXi Group, 2013
Energy information ● Analysis ● Consulting
www.ua-energy.org/en
thanked the German party for participation in the modernization of the gas transportation system, and promised to personally monitor its progress. Minister L.Kozhara spoke on the same issue with the EU Commissioner G.Oettinger, and Minister E.Stavytskyi - with the Ambassador of Germany to Ukraine. As part of preparing the agreement on pipeline transit among the CIS countries, Ukraine plans to negotiate getting access to Russian pipelines to transit Turkmen gas. The Vice Prime Minister Y.Boyko met with the President of Turkmenistan, preparing ground for the visit of the President V.Yanukovych. According to media reports, the Nezalezhnist jack-up rig started drilling of the first well, and Minister E.Stavytskyi forecasts that Ukraine will become a leader of the Black Sea gas production in 2013. Local authorities gave permission to search for oil and gas in Volyn region, and the Energy Ministry promises to report on the plans to build the LNG-terminal this month. 5. Public discussion on unconventional gas broadens its scope. While last week media were more focused on the environmental aspects of production, this week's discussion concerned the financial conditions of the companies working in Ukraine. According to media reports, Shell agreed to ease the tax regime, while the Vice Prime Minister Y.Boyko believes that conditions of the PSA with Shell are profitable, the Prime Minister M.Azarov declared 10 bln USD of expected investment, and international experts believe the agreement is a positive signal to other foreign investors. The Minister E.Stavytskyi said that Ukraine will completely satisfy its demand with gas from the Yuzivska field. Some experts and parties demand to disclose the PSA with Shell, and the "Svoboda" political party - which criticized the agreement – expressed in favor of unconventional gas production, provided that all the requirements are complied with. Shell example is followed by other companies. Vanco Prykerchenska, which signed a settlement agreement with Ukraine, wants to start operations and promises to share 75% of the extracted gas with the state. At the same time, cooperation with other major investor – Chevron - despite assurances of the officials, may be delayed. The company uses this time to raise public awareness of unconventional gas. Cooperation with large international companies is accompanied by discussions of non-transparent state participation in the projects. Information about the SPK-Geoservis company as well as about the conflict around the Naftogazvydobuvannya company is being concealed. 6. While Ukraine delays the reform of electricity market, infrastructure crisis continues. The Law on Electricity Market is still not adopted. The Energy Community requires to speed up this process, and the respective working group should complete revision of the document by the end of March. Meanwhile, industrial enterprises continue to get discounts on electricity and can get them on gas, while bad weather conditions regularly bring down the system of electricity supply. 7. Although OPEC considers market as balanced, oil prices increase on international markets and on the Ukrainian one. Against the background of Iran banning oil and gas exports to Europe, the countries focus on the development of internal market of oil and oil products - Turkey, according to media, plans to search for oil in the Black Sea with Shell, and
DiXi Group, 2013
Energy information ● Analysis ● Consulting
www.ua-energy.org/en
Kazakhstan is going to temporarily ban imports of Russian oil and allow to development new oil fields. "Sarmatia" plans to complete the Odessa-Brody-Plock oil pipeline, Lukoil wants to restart the Odessa refinery, and "Gas Ukraine 2009" plans to buy a refinery in Ukraine. 8. Despite high indebtsness of the population for housing and utility services, the government prepares to increase tariffs. Population debts for utility services totaled 12.7 bln UAH, and Kyiv city needs additional 2.4 bln UAH to cover the tariff difference. Meanwhile, both experts and the government are talking about possible increase of tariffs and the National Commission for Regulation of Utility services recommends to install metering equipment.