Russia Metals and Mining, Ukraine Oil and Gas

Blockade of Donbass to de-energize the Ukraine

For the first time in the past two years the Ukraine is faced with the real prospect of rolling blackouts.

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Russia may stop supplying coal to the Ukraine as a response to Crimea

Russia may decide to terminate the supply of coal to the Ukraine in response to the energy blockade of the Crimea. This was stated by the Russian Energy Minister Alexander Novak today.
"Maybe in this situation we should take a similar decision on the termination of coal supply by our commercial organizations that supply coal to Ukrainian power plants," - said the Minister.

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The Ukraine is behind schedule of coal and gas accumulation

In September, stocks of coal at power plants and power stations of Ukraine grew by a third, but all energy companies are behind the ministerial schedule of fuel accumulation.
It is reported by the Interfax-Ukraine, which referred to its own sources in the Ministry of Energy and Coal Industry of the Ukraine.
For example, in September 2015, the coal stocks in warehouses of thermal power plants and thermal power stations in the Ukraine increased by 32.2% (to 577.7 thousand tons) and by October 1, 2015, they made up 2 372.8 thousand tons.

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The Ukraine to allocate 3 billion hryvnias to buy coal for winter of 2015-2016

On July 7, 2015, the head of the Ukrainian Ministry of Energy and Coal Industry Mr. V.Demchishin in his usual upbeat and eloquent manner stated that the situation with the coal reserves in the country improved – over the past two months the Ukraine had accumulated 600 thousand coal at warehouses of thermal stations, and over the next four months 1 million tons would be delivered.
However, the Minister again didn’t see the differences in the plans of his Ministry and the realities - he stated that everything was possible and realistic, but for purchases require money, and not just from the budget, but from Ukrainian banks. In 2014, this help – for 2 billion hryvnias – was provided by Oschadbank.

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New tool in Russian energy policy may be coal

Despite the bitter political conflict, the Ukraine passed the heating season of 2014-2015 by importing gas, coal and electricity from Russia. Traditionally, in the center of events in public were gas relations. But in fact, gas means not as much as coal for the energy of the Ukraine - it provides 47% of electricity generation. The country can’t take anthracite, locked in the war zone, import alternative is too expensive and is not covered by the tariff, coal stocks are falling. By the beginning of the new heating season, the Ukraine will have to solve the problems of its coal industry or just to prepare for large-scale imports, financing of which is made difficult because of low energy tariffs and exchange rate differences.
The difficult heating season of 2014-2015 is being completed in the Ukraine. Preliminary results show that the only thing, with which the country was lucky this time, was the weather. Warm winter allowed the country to save fuel. "If the average temperature dropped by five degrees, the system would collapse," – DTEK’s director of business Vitaly Butenko says. But the flip side of the snowless winter became a critical situation with water content at hydro electric power plants (8.6% of installed capacity in the Ukraine), which registered a 45-year low.

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The Ukraine replaces gas with Russian coal and electricity

In the coming days, the Ukraine will resume purchases of Russian gas, but by results of the year its dependence on Gazprom will be minimal in history - a little more than a third of all needs. The country has begun rolling blackouts, the threat of collapse pushes Kiev to the other extreme: it increases the purchases of Russian coal, nuclear fuel and is going to begin a large-scale import of electricity from Russia for the first time in its history, the RBC daily reports.
 
Cases of need
According to the Russian Statistics Service, in the first ten months Russia reduced the supplies of virtually all types of energy sources to the Ukraine: the most massive was the reduction of gas supplies - more than by a third, the supply of oil reduced less than others - by 0.9%. In value terms, the exports fell by 15% to $9.86 billion (this figure includes the gas supply, not fully paid-by the Ukraine).
At the same time, the Ukraine doesn’t buy Russian gas from mid-June: the parties have argued about the debts for a long time and couldn’t agree on the price of the new supplies. The interim agreement, the so-called winter package, was signed in late October: Ukraine promised to pay $3.1 billion of the debt before the end of 2014 and agreed to purchase Russian gas at the price $378 per 1 thousand cubic meters until April 1, 2015.

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Gas market is melted with charcoal.

The Ukraine will receive both types of fuel from Russia.
For the first time in six months the Ukraine has resumed the purchase of Russian gas, transferring an advance payment of $ 378 million for the supply of 1 billion cubic meters. Kiev was not intending to buy gas from "Gazprom" at least until 2015, but the Ukraine had to accept the deal because of the critical situation with coal, which escalated the involvement of Russia. Immediately after the transfer of money to "Gazprom" the Russian coal wagons, who were standing at the border for two weeks, went to the Ukraine.
On Saturday night "Naftogaz of Ukraine" transferred $ 378 million to "Gazprom" for the supply of 1 billion cubic meters of gas. "Gazprom" confirmed the receipt of the money, the supply should begin within 48 hours. Kiev was forced to resume the purchase of Russian gas, interrupted on June 16th after the transfer of "Naftogaz" to the prepay system, because of the acute energy shortage. The Ukraine tried to move to alternative fuels, such as coal, but to no avail. Its delivery from South Africa has been ineffective, and the shipment of coal from Russia stopped two weeks ago without an official explanation. Sources of "the Kommersant" claim that it was made by a secret order of the authorities (see. "the Kommersant" dated November 25th).

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Russia does not heat the Ukraine

The parties can’t recover coal and electric energy supplies.
The efforts of the Ukraine to cover the energy deficit with the help of Russia face more and more obstacles. Following the termination of the Russian coal dispatch, the almost successful attempt to renew the electric energy supply might fail. The deputy Minister of Energy of the Ukraine, V. Ulida, who approved them, has been fired. As a result the country’s energy companies don’t have a choice but to keep the unofficial negotiations on coal purchase with the Governments of the Donetsk and Lugansk Republics but the latter agree to sell fuel by the advance payment.
The Ukraine’s energy companies that have faced a deficit of energy resources keep trying to renew the supplies from Russia. Yesterday the Ministry of Energy of the Ukraine allowed the local companies to import the electric energy from the neighboring countries at the volume of 1.5 GW, the Ministry told Kommersant. There is no import now but the President Poroshenko ordered to work out this issue on November 15th. The National Security and Defense Council ordered the Ministry of Energy to study this issue so as to reduce gas and grease oil use at the thermal power plants. The electric energy import from Russia is possible in the case of exhaustion of the Ukraine’s reserve capacities, the Ministry of Energy of the Ukraine says. According to Interfax, “Energomerezha” (Energoset) and DTEK of R. Akhmetov were issued permissions, each is allowed import up to 1.5 GW. The Minister of Energy of the Ukraine, Y. Prodan, ordered “Ukrinterenergo” (main operator of electric energy export-import) to hold negotiations with Russia upon the volumes of supplies.

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Donbass is provided with Russian oil products

Most of the retail traders of Donbass have stopped accounting to the State Statistic Service about their sales, according to the data for August. In August 2014, the Lugansk and the Donetsk regions reduced retail petrol sales by 93% to 2,100 tons and diesel fuel by 89% to 1,000 tons versus August 2013. Donbass considerably reduced the number of the petrol stations accounting to the State Statistic Service. The number was 264 stations in August compared to 976 in May. The experts think that it means the full loss of idea about the affairs in Donbass by the State Statistic Service.

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Prodan: the Ukraine to buy coal in Russia.

Before the end of the year the Ukraine planned to import 5.6 million tons of coal, Russia is among its possible suppliers, Yuriy Prodan stated on Tuesday.
"We have taken measures to compensate for the deficit that exists. We enter into an agreement for the supply of coal from the territory of the Republic of South Africa, this is 1 million tons of coal, which are to be delivered up to the end of the year. We enter into an agreement for the supply of this brand of coal from Russia, unfortunately, this brand is only present in Russia and some other countries", - UNIAN quoted Prodan.
"The total volume under those contracts that we have on the coal supply to the end of the year is 5.6 million tons", - he added.

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