Russian invasion of Ukraine a gamechanger for European gas imports

The Operator of the Gas Transmission System of Ukraine (OGTSU) reported the pipeline that supplies gas to the Vuglegirska thermal power plant was wrecked by artillery shelling, but crews were eventually able to make light repairs to the line.

The Russian invasion of Ukraine represents a gamechanger for Europe’s gas import picture. The attack, which began on February 24, has galvanized European efforts to reduce its dependence on Russian gas, and has spurred the development of certain gas infrastructure projects while resulting in the likely demise of others.

While other countries have stopped short of a military intervention for fear of escalating the conflict, economic sanctions against Russia have been swift and unprecedented. And while Russian oil and gas continues to flow to Europe for now, the invasion has precipitated major changes in energy policy across Europe. One of the early actions against Russia – taken on the eve of the invasion as the situation was escalating – was Germany’s decision to suspend the approval process for the Nord Stream 2 gas pipeline.

The project had been ready to enter service, and would have added new capacity directly between Russia and Germany. The suspension has almost certainly killed it off altogether. Additionally, Germany said it would expedite plans to build two new LNG import terminals, while also taking steps to ramp up domestic gas supply, which has been falling for some time. Illustrating the urgency of the shift to different gas projects, a memorandum of understanding (MoU) on one of the new LNG projects was signed in early March.

LNG import plans are also being revived in Italy, where Enel has reportedly said it is ready to resurrect plans for a fully permitted but previously shelved project. Meanwhile, the Italian government is said to be targeting the addition of a new floating import facility.

These plans are advancing against the backdrop of a major European shift away from Russian gas. The European Union unveiled a new plan to cut Russian gas imports by two-thirds within a year. The dramatic move is expected to benefit LNG exporters, especially in the US, over the longer term, though additional European regasification capacity will need to be built as existing import terminals have little spare capacity available. Europe had already been the top destination for US LNG for three consecutive months as of the start of March. However, there have also been warnings that additional LNG imports alone would not be enough to replace two-thirds of the continent’s Russian gas imports.

Ukraine’s OGTSU reports damage to its gas network

Meanwhile, in the Ukraine, the Operator of the Gas Transmission System of Ukraine (OGTSU) said the war has destroyed portions of the Ukraine’s gas grid and crews are struggling to make repairs. Some of the network remains in operation, but the war had disrupted its network in multiple spots. On March 20, OGTSU said it transported 98.4 mcm of natural gas to Ukrainian residents, hospitals, industrial facilities, and other infrastructure.

The pipeline that supplies gas to the Vuglegirska thermal power plant was wrecked by artillery shelling and specialists were able to make light repairs after they were initially unable to get access to the location. The thermal power plant has received backup power supply, the OGTSU said.

On March 19-20, the operator resumed the operation of six gas distribution stations, but 40 gas distribution stations remain disconnected as of March 21. “These are several settlements where hostilities continue, in Donetsk, Luhansk, Kyiv, Zaporizhia, Mykolaiv, Kherson, and Kharkiv regions,” the operator stated.

Russian troops were present at more than one compressor station along Ukraine’s gas pipeline network. It did not specify how many stations had a Russian military presence, or which stations these were. However, it suggested that the soldiers’ presence posed a potential threat to the smooth transit of natural gas.

“The OGTSU demands that the military and armed groups immediately leave the territory of the compressor stations and stop trying to influence the operation of the [gas transmission system],” the operator stated. “Interference in the technological processes of GTS operations creates significant risks for the safety of continuous gas transportation to consumers in Ukraine and Europe.”

Ukraine represents a major transit corridor for Russian gas being transported via pipeline to Europe. In 2021, around 1.47 tcf/y (4.16 × 1010 m3/y) of Russian gas transited Ukraine to reach markets in Europe. This marked a decrease of 25% on 2020, as Russia had increasingly been seeking to send its gas to Europe using routes that did not go through Ukraine.

While no major disruption to European gas supply as a result of Russia’s invasion of Ukraine had been reported as of March 16, gas shipments from Russia were nonetheless reported to be falling. At the Velke Kapusany border crossing between Ukraine and Slovakia, gas flows stood at 2.4 bcf/d (6.9 × 107 m3/d) on March 16, down by around 318 mmcf/d (9 × 106 m3/d) and representing their lowest level since February 24, the day Russia launched its invasion of Ukraine.

“The company maintains operational and technological control over the Ukrainian GTS. Our employees do everything to ensure that the GTS performs its functions to provide gas to Ukrainian consumers. After all, in many cases, due to electricity networks damage, gas remains the only energy source.”

Olga Bielkova, director on government and international affairs of the OTGSU, called for more diverse supplies to the region of Eastern Europe and better integration with Eastern Europe at the meeting of the Energy Community Secretariat of Europe (SEEGAS).

“Ukrainian GTS is designed in such a way, that we do not have separate pipelines for transit and separate ones for domestic gas transportation,” she said. “Currently, transit is an additional factor of security for the Ukrainian gas transportation infrastructure. Proportionally, we will weaken the position of Russia on the European energy market.”

Longer term, she called for increasing firm capacities with Slovokia, Hungary, Romania and Poland.