sharing the energy of knowledge

Ukraine

Table of Contents
  1. 1. Introduction
  2. 2. Key statistics
    1. 2.1. Unconventional gas
  3. 3. Gas demand
    1. 3.1. Total Primary Energy Consumption by Fuel
    2. 3.2. Gas demand by sector
  4. 4. Gas supply
    1. 4.1. Gas reserves
    2. 4.2. Exploration & Production
    3. 4.3. Imports & Exports
  5. 5. Gas infrastructure
    1. 5.1. Gas grid
    2. 5.2. LNG
    3. 5.3. Storage
  6. 6. Gas market regulation
    1. 6.1. Upstream
    2. 6.2. Networks
    3. 6.3. Downstream

1. Introduction

Ukraine is situated in the central-eastern part of Europe and is bordered to the east and northeast by the Russian Federation; to the north-west by Belarus; to the southwest by Romania and Moldova; to the west by Hungary, Poland and Slovakia; and to the south and southeast by the Black Sea and the Sea of Azov respectively. Ukraine has a total surface of 603,628 square kilometers (233,090 square miles) and is inhabited by approximately 46 million people (2010 estimate), making it the 28th most populous country in the world. The country has a yearly GDP (PPP) of USD 329.5 billion (2011 est.) and a GDP (PPP) per capita of $7,233. For nominal GDP these figures amount to USD 165 billion and $3,621. [1]

Ukraine is one of the top European energy consumers. Compared to Germany for example, it consumes almost double the energy per unit of GDP. Ukraine has a gas reserve estimated at about 1 tcm. Nevertheless, it still imports about 64% of the gas it consumes (from Russia; 2010). About 80% of the Russian gas imports travel through Ukraine and thus Ukraine is a very important transit country, for basically all of Europe. There have been several disputes between the Ukraine and Russia with regard to the transportation of natural gas through Ukraine. [1], [2]  

edit top


2. Key statistics

Basic gas facts - Ukraine
Basic Gas Facts 2006 2007 2008 2009 2010e
Gas reserves (bcm) .. .. .. 1000 900
Gas production (mcm) 21090 21140 21444 21489 20382
Gas consumption (mcm) 69484 66998 66814 52536 56975
Gas imports (mcm) 50221 50087 52584 37954 36593
-imports pipeline (mcm) 50221 50087 52584 37954 36593
-imports LNG (mcm)          
Import dependency (%)* .. .. .. .. ..
Gas exports (mcm) 4 4 5 5 6
Natural gas supply per capita (toe) .. .. .. .. ..
Technically recoverable shale gas resources (bcm) .. .. .. 1190 ..
Coal Bed Methane reserves (bcm)** .. .. .. 1700 ..
c = confidential; - = nill; ..= not available
* Imports dependency of natural gas = (imports - exports) / consumption
**Proven & Probable (2P); U.S. Environmental Protection Agency, Coalbed Methane Outreach Program
Sources: Natural Gas Information © OECD/IEA, 2011, EIA Analysis & Projections, GMI/EPA Coal Mine Methane Country Profiles

[1], [2], [3]

Basic energy facts - Ukraine
Basic Energy Facts 2006 2007 2008 2009 2010e
Total Energy Consumption (mtoe) 137.51 135.25 131.92 111.98 118.02
CO2 emissions, energy-related (Mt) 333.31 354.09 352.80 252.47 ..
CO2 intensity, energy-related (tCO2/toe) .. .. .. .. ..
Energy consumption per capita (toe/cap) 3.19 3.45 3.43 2.59 ..
CO2 per capita, energy-related (tCO2/cap) 7.15 7.65 7.67 5.53 ..
c = confidential; - = nill; ..= not available
Source: BP Statistical Review June 2011 & EIA International Energy Statistics

[4], [5]

edit top


2.1. Unconventional gas

Shale Gas

In Ukraine, there are two basins of importance when it comes to shale gas: the Lublin Basin and the Dnieper-Donets Basin. The Ukrainian portion of the Lublin Basin covers an area of 42,648 square kilometres (26,500 square miles). The Dnieper-Donets Basin follows a northwest – southeast axis through central Ukraine and into Russia. Today, the Dnieper-Donets Basin provides approximately 90% of Ukraine’s oil and gas, from over 140 producing fields.

It is estimated that Ukraine has 1,360 bcm of gas in-place (risked) in the prospective area of the Dnieper-Donets Basin and 4,220 bcm of gas in-place (risked) in the Lublin Basin. Of this 5,580 bcm, it is estimated that 1,190 Tcf could be ultimately technically recoverable, representing a large increase in the country’s current reserve base.

Major E&P companies such as Shell and Exxon Mobil have expressed interest in Ukrainian shale gas potential, but have not specified which areas they intend to explore. The large, U.S. E&P company, Marathon Oil, exited Ukraine in 2008. The only international firm now actively exploring the Ukrainian Lublin Basin is Eurogas, Inc, which plans to test for commercial gas potential from CBM and shale formations. [1]

Coalbed Methane

Ukraine’s CBM resource is approximately 1.7 trillion cubic meters. Seams of coal are present in a section 500–900 meters (m) deep. Markets for potential produced gas include direct pipeline sales and compressed natural gas (CNG) projects. EuroGas Inc. was the first foreign company to drill for CBM in 1998, but has had no commercial success. In 2008, they formed a joint venture with one of Ukraine’s largest industrial holding groups to explore and develop CBM leases in east and west Ukraine, although this project is still in the planning stages. Ukraine has very limited research and development (R&D) resources available for pursuing CMM or CBM research, namely lack of technology for and experience in applying hydro-fracturing to stimulate CBM production. A more favorable investment climate along with clarity on CBM ownership issues are needed before more foreign companies are likely to commit to CBM projects in Ukraine. [2]  

edit top


3. Gas demand

edit top


3.1. Total Primary Energy Consumption by Fuel

In 2010, Ukraine’s Total Primary Energy Consumption amounted to 118 mtoe, a 5.3% increase on 2009. In 2010, oil accounted for 11.6 mtoe, while coal and gas accounted for 36.4 mtoe and 46.9 mtoe respectively. Hydro accounted for 2.9 mtoe and nuclear for 20.2.mtoe.

other: nuclear, hydro, geothermal, solar, biofuels & waste, electricity and heat

[1]

other: nuclear, hydro, geothermal, solar, biofuels & waste, electricity and heat

[1]

edit top


3.2. Gas demand by sector

Currently, it is only known that Ukraine used 20,335 mcm of its gas consumption in 2009 for transformation (power generation). [1]

edit top


4. Gas supply

edit top


4.1. Gas reserves

In 2010, Ukraine held about 900 bcm of conventional gas reserves. The reserves-to-production ratio* for Ukraine is 50.4 years, much higher than the EU’s average R/P-ratio of 14 years.[1]

*Reserves-to-production (R/P) ratio – If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time that those remaining reserves would last if production were to continue at that rate.  

edit top


4.2. Exploration & Production

In 2010, Ukraine produced 20,382 mcm of natural gas, 1,107 mcm less than in the previous year. Despite its considerable domestic production, Ukraine depends on imports for the majority of the gas it consumes. [1]

edit top


4.3. Imports & Exports

In 2010, Ukraine imported 36,593 mcm natural gas representing around 64% of its domestic consumption. All of Ukraine’s imports are being accomplished via pipeline, so far there are no LNG imports.

Imports by transport type - Ukraine
By transport type (in mcm) 2006 2007 2008 2009 2010e %Total 2010
Pipeline imports .. 50087 52584 37954 36593 100%
LNG imports ..          
Total 50221 50087 52584 37954 36593  
%Total Consumption .. 74.76% 78.70% 72.24% 64.23%  
c = confidential; - = nill; ..= not available
Source: Natural Gas Information © OECD/IEA, 2011

[1]

The proportion of Russian gas in Ukraine’s imports has been increasing steadily over the years 2008-2010. In 2007 there was no gas imported from Russia, in 2009 about 58% of gas imports came from Russia and in 2010, all of Ukraine’s gas imports originated from Russia. [1]

Imports by country - Ukraine
By country of origin (in mcm) 2006 2007 2008 2009 2010e %Total Imports 2010
Kazakhstan ..   9639 5032    
Russia ..   1376 22189 36593 100%
Turkmenistan ..   31251 4502    
Uzbekistan ..   10318 6231    
Other .. 50087        
Total 50221 50087 52584 37954 36593  
%Total Consumption 72.28% 74.76% 78.70% 72.24% 64.23%  
c = confidential; - = nill; ..= not available
Source: Natural Gas Information © OECD/IEA, 2011

Ukraine exports a small amount of its production of natural gas to a number of unspecified countries. This does not include the enormous amounts of transited gas from Russia and countries in the Caspian and Persian region to Europe.

Exports by country - Ukraine
By country of destination (in mcm) 2006e 2007e 2008e 2009e 2010e %Total Exports 2010
Other 4 4 5 5 6 100%
Total 4 4 5 5 6  
%Total Production 0.02% 0.02% 0.02% 0.02% 0.03%  
c = confidential; - = nill; ..= not available, e = estimated
Source: Natural Gas Information © OECD/IEA, 2011

[1]

edit top


5. Gas infrastructure

edit top


5.1. Gas grid

Pipelines

Ukraine has an extensive gas transmission system, which consists of 39,800 km of pipelines, including 14,000 km with a diameter ranging from 1,020 to 1,420 mm, and 74 compressor stations providing a total capacity of 5,450 MW. The input capacity of the system is 288 bcm per year, and the output stands at 178,5 bcm per year. The grid is owned by Naftogaz of Ukraine and operated by SC Ukratransgas, a subsidiary company of Naftogaz. Ukraine’s gas transmission system provides both gas supply to domestic consumers and a major volume of Russian gas export deliveries to other European countries. The company annually transmits 50-60 bcm to Ukrainian consumers with natural gas transit through the Ukrainian gas transmission system, ranging from 110 to 120 bcm to Central and Western European countries. Today, the technical capability exists to increase gas transit to Central and Western European countries up to 142 bcm without expanding the gas transmission system. [1]  

Gas Infrastructure Projects

Ukraine is a major transit country of the natural gas to the European Union. However, Ukraine is facing the problem of the decay of its gas transporting system built when Ukraine was part of the Soviet Union. In order to keep its leading position in the natural gas transit market Ukraine needs to modernize its gas transporting facilities. The project “Modernization and reconstruction of the Urengoi-Pomary-Uzhgorod main pipeline” commenced on July 19, 2011. By the end of 2018 the Ukrainian government expects to complete the reconstruction and modernization of the Ukrainian pipelines with USD 6.5 bln of foreign investment endowed in the system modernization projects. So far, the European Bank for Reconstruction and Development and the European Investment Bank signed agreements with Ukraine documenting their commitment to issue the USD 300 mln, 15 year long loan. [1] Particularly, the following projects were already developed: construction of new gas pipelines and increase of transmission capacities of the existing pipelines at the expense of construction of new gas compressor stations. In accordance with the technological calculations, due to implementation of these projects the Ukrainian gas pipeline network would increase its transit potential almost by 60 bcm per year — up to 200 bcm per year. [2]  

edit top


5.2. LNG

At the end of August 2011 there were no operational LNG terminals in Ukraine. However, there is a 10 bcm per year regasification terminal proposed to start up in 2016. [1]

LNG - Ukraine
Site Storage   Regasification   Owner Operator TPA Start-up Source Status
  #Tanks Cap.* #Vaporizers Cap.**            
Ukraine, black sea coast .. .. .. 10 .. .. .. 2016 .. P
c = confidential; - = nill; ..= not available
E = existing; U = under construction; P = proposed
* capacity in m3 x1,000 in LNG
**nominal capacity in bcm/year of gas
Source: GIIGNL 2010, Globallnginfo.com, U.S. Energy Information Administration & IEA Natural Gas Information 2011

[1]

edit top


5.3. Storage

At the end of August 2011 there were 13 operational storage facility in Ukraine with a cumulated technical storage capacity of 32,130 mcm, a cumulated injection capacity of 196.63 mcm/day and a withdrawal capacity of 300.84 mcm/day. All these facilities are based on depleted oil/gas fields or aquifers. At the moment there seem to be no additional storages planned. [1]

Storage existing - Ukraine
Nr. Facility name Operator Storage Capacity (mcm) Withdraw (mcm/day) Injection (mcm/day) TPA* Type
1 Bogorodchany UkrTransgas 2300 50.04 13.44  .. Oil/Gasfield
2 Bil'che-Volytsya UkrTransgas 17050 122.4 100.8  .. Oil/Gasfield
3 Mryn UkrTransgas 1500 12.96 8.4  .. Aquifer
4 Dashava UkrTransgas 2150 24.96 18  .. Oil/Gasfield
5 Glebovs'ke Chernomornetegaz 1000 6.24 4.8  .. Oil/Gasfield
6 Kegychivka UkrTransgas 700 7.68 5.04  .. Oil/Gasfield
7 Krasnopopivka UkrTransgas 420 4.68 3  .. Oil/Gasfield
8 Olyshevka UkrTransgas 310 3 2.592  .. Aquifer
9 Opary UkrTransgas 2100 20.04 13.2  .. Oil/Gasfield
10 Proletarka (M-7) UkrTransgas 1000 12.24 6  .. Oil/Gasfield
11 Solokha UkrTransgas 1200 9.48 6.6  .. Oil/Gasfield
12 Ugers'ko UkrTransgas 2000 23.04 12  .. Oil/Gasfield
13 Vergunka UkrTransgas 400 4.08 2.76  .. Oil/Gasfield
Total Total   32130 300.84 196.632    
TPA: Regulated (R) - Negotiated (N) - Hybrid (H) - Not Applicable (X)
Source: Gas Infrastructure Europe: GSE Storage Map 2011

edit top


6. Gas market regulation

The natural gas sector in Ukraine is dominated by the state-owned holding company called ‘Naftohaz Ukrayiny’ (‘Naftogaz of Ukraine’). This company is in charge of the production/extraction, import, transport and distribution/sales of natural gas (together with oil products). Naftogaz is made up of Ukrgazprom (production and transmission of gas), Ukrgaz (sales) and Ukrneft (principal oil producer).

The country is now in the process of reforming its gas market by adjusting state legislation that regulates the functioning of Naftogaz. This reform includes the separation of the different functions (extraction, transportation, sales) into different financially and legally independent companies, so as to reflect the norms of the EU Directive N2003/55. This reform will help the Ukrainian government find funding for its much needed reconstruction of its gas transit system.  

edit top


6.1. Upstream

About a quarter of the country’s gas consumption needs are covered by domestic production, the rest of the gas being imported from various sources. Amongst these sources, Ukraine had long term contracts with Turkmenistan to cover most of its import needs. In 2006, there was a 5 year contract signed with RosUkrEnergo, a trading company 50% owned by Gazprom and 50% ownership undisclosed. Since 2007, Russian imports have accounted for an increasing percentage. In 2010 all of the gas imported by Ukraine, came from Russia.

edit top


6.2. Networks

Ukraine plays a crucial role as a transit country for Russian gas heading towards the EU. About 80-90% of Ukraine’s gas imports are re-exported. Naftohaz Ukrayiny established in 2002 together with Gazprom LLC International Consortium to manage and upgrade the Ukrainian gas infrastructure.

edit top


6.3. Downstream

In the conditions of escalating competition in the market of transportation of energy products, the strategic priority of Naftogaz is to strengthen their transit potential and ensure reliability of gas supplies. This problem is solved through implementation of the Program for Modernization and Technical Re-equipment of Gas Pipelines and Gas Compressor Stations, introduction of the European standards in the course of operation of these gas pipelines and compressor stations, as well as through application of energy-saving technologies and utilization of energy-saving equipment.

edit top




Comments

About EDI
Executive Education
Energy Knowledge
Events
Contact