Ukraine holds talks with US over gas reserves to fight supply crisis
Ukraine is preparing to market its national gas reserves to help Europe shore up supplies over the coming decade.
State-owned energy provider Naftogaz is holding talks with with American drillers to pump gas from its vast untapped reserves to Europe, according to The Telegraph.
It has identified huge gas reserves waiting to be tapped, including in the Dnipro-Donets Basin.
The move could help to ease the region’s energy crisis over the coming years, helping Europe find new sources of gas once the war in Ukraine ends.
The West has depended on highly expensive liquified natural gas (LNG) imports to meet its energy needs and stave off blackouts amid the current crisis.
Gas imports to the EU and UK from Russia are down by more than 80 per cent compared to a year ago, according to research from think tank Bruegel.
Meanwhile LNG imports are double 2021 levels and are on track to hit record highs in 2022, which has driven up costs for the West.
Speaking to The Telegraph, Myron Wasylyk, adviser to the Naftogaz’s chief executive, revealed Naftogaz “soon will be marketing some of the projects.”
He said: “We have a number of resources and gas reserves there that are basically the second largest in Europe. There is exploration potential there and also export potential there. We estimate there could be up to 40bn cubic metres.
“There is a lot of potential there but it won’t come online until the second half of this decade… We have a number of basins which are currently undeveloped.”
He argued tapping the reserves would “absolutely” help meet Europe’s future gas needs, which has raced to top up supplies to 90 per cent of capacity ahead of winter.
This has helped drive down European gas prices, which have halved to €145 per megawatt hour since peaking in August.
Supply crisis lingers across Europe
Despite the supply scramble, investment group Stifel has warned a supply crunch is still possible in Europe this winter without further rationing, and that the current energy crisis could drag on for years to come.
This outlook is shared by Paris-based climate body, the International Energy Agency (IEA).
It forecasts that the continent will be on the verge of a supply crunch this winter if Russia turns off the taps.
The IEA’s research has outlined that without demand reductions in place, EU gas storage would be less than 20 per cent full in February, assuming a high level of liquefied natural gas supply – and close to five per cent full, assuming low LNG supply.
Naftogaz has also warned it is facing its own supply difficulties this winter, and needs funds to secure 3bn cubic meters of gas to avoid a shortfall this winter.
It has also called on the West to bring in oil and gas price caps to slash Russia’s war revenues.
Naftogaz’s chief media adviser Svitlana Zalishchuk told City PM that Europe should move forward with caps for oil and gas prices to squeeze the Kremlin’s hefty takings from this year’s commodities boom.
She praised the European Union’s series of sanctions packages, but raised concerns over the lack of agreement within the bloc for price caps.
Zalishchuk said: “We see that they haven’t been realised because there’s no unity in the European Union on that front. So, we believe that smart measures coming from our international partners are still needed to influence the revenues the Russians earn for the energy resources.”