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Global Energy Advisory September 23rd 2016

Global Energy Advisory September 23rd 2016

While the Iraq oil industry…

Ukraine Pipeline Explodes

A fiery explosion in central Ukraine cut a gas pipeline serving EU customers in central Ukraine on June 17, the day after Russia cut all gas supplies to Ukraine itself in a dispute over payment arrears.

The explosion at about 2 p.m. local time blew a column of flame 650 feet high in a remote area of the Poltava region in central Ukraine, local officials said. Despite the pyrotechnics, Ukrtransgaz, which operates the pipeline, said the fire was put out in less than two hours. Supplies to Europe were quickly shunted to a parallel pipeline.

Eustream, the Slovakian operator of the pipeline to European customers, confirmed that the western flow were uninterrupted. The Eustream line transfers gas from Russia through Ukraine to Slovakia, and from there, to Hungary and Romania.

Russia and Ukraine are locked in a dispute over how much Russia is charging Ukraine for gas. The morning of June 16 was the deadline for Ukraine’s gas company, Naftogaz, to pay nearly $2 billion of the more than $4 billion it owes for past deliveries of gas. Naftogaz, didn’t meet the deadline, and supplies to Ukraine were immediately cut, though gas for Europe continued to pass through Ukraine.

Kiev argues that Russia is using the dispute to inflict further harm on Ukraine’s already weak economy and to raise worries in Europe about its gas supplies. They say this is an effort to apply leverage on Ukraine over the separatist rebellion in the east of the country.

Related Article: Moscow and Kiev: A Dialogue Of The Deaf

The explosion in central Ukraine was about a kilometer from the nearest village, Iskovtsy, local police said, and no injuries or deaths were reported.

Ukraine's Energy Ministry issued a statement suggesting the explosion could have been a “terrorist attack.” But Svetlana Pibalko, a spokeswoman for Ukraine’s Emergency Situations Ministry, said it was the interior ministry’s duty to determine that. Ukraine’s interior minister, Arsen Avakov, said several causes were being considered.

One potential cause would be neglect of the pipeline by Naftogaz. Kiev has previously been accused of lackluster maintenance. Last month, prosecutors conducted a criminal probe into another pipeline explosion in western Ukraine, but concluded that sabotage, not neglect, was a more likely cause.

By Andy Tully of Oilprice.com



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  • Andrey Palyura on June 20 2014 said:
    Ukraine does not pay any bills for gas. Russia several times warned Ukraine that in case of nonpayment Russia in accordance with contract 2009 would have inforced prepayment. So it was not immediate cut of supply. Deadline was many times postponed. Ukraine should pay at least half of the debt of 4 bln USD - 2 bln USD. Russia insists on it, not more immediately. So Russia really donates Ukraine economy by free credit. Ukraine politicised the gas deal applying to the turmoil on East par of country.
  • Arkady on June 17 2014 said:
    As you write: "Kiev argues that Russia is using the dispute to inflict further harm on Ukraine’s already weak economy and to raise worries in Europe about its gas supplies. They say this is an effort to apply leverage on Ukraine over the separatist rebellion in the east of the country.".

    I kindly ask you to imagine: you drive the car to gas station to refuel it, get the gas and do not pay for the gas (you get the gas from this station during 5 years and every time you pay for it!). And you tell to the owner of the gas station he is going "to apply leverage on you over yr bad relations with yr wife"! It looks fun! Do you really trust what you write?!

    Russia DID HELPED to Ukraine economy sending 14 bln m3 of gas FOR FREE !!! Why dont you write about this fact?! I wonder if U.S. helps to Ukraine the same way.
    Or you just "export Western Democracy" and everybody are
    happy for this, like in Iraq right now?!

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