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Goldman: Expect Another Bull Run In Oil

Goldman: Expect Another Bull Run In Oil

While oil prices are tumbling,…

Ukraine May Declare Energy Emergency Over Coal Shortage

Ukraine Train

Ukraine’s government is considering declaring a state of emergency in the energy sector due to severe shortage of coal deliveries from the conflict-torn Donbas region, which produces a large part of the coal that Ukraine’s power-generating plants consume, Ukraine’s Unian agency reported on Monday.

The issue of the introduction of a state of emergency in the Ukrainian energy sector will be on the agenda of the energy staff meeting. We cannot allow the drop in the strategic coal reserves,” Ukrainian Prime Minister Volodymyr Groysman told reporters, as quoted by Ukrainian media.

On January 25, a railroad that was being used for coal transportation from the Donbas region was damaged by “unauthorized persons”, and according to Interfax-Ukraine, Ukraine’s Energy and Coal Industry Minister Ihor Nasalyk had said that blocking of the Luhansk-Popasna railway section creates risks for the Ukrainian energy security.

According to Ukranian news outlet UAWire, the thermal power plants in Ukraine would not be able to function for quite some time without anthracite coal from Donbas. Out of the total 24 million tons of coal that Ukrainian thermal power plants use each year, 9 million tons are anthracite coal – which is produced only in Donbas.

According to Sputnik, Ukraine’s minister Nasalyk said that coal for the power plants may be depleted within 45 days.

Related: Oil Prices Head Lower In Spite Of Bullish OPEC Data

UAWire reported on Sunday that Nasalyk has warned that in case of shortage of these critical supplies, there would be rolling blackouts and increased coal prices.

If Ukraine’s state decides not to trade goods with the Donbas territory, Ukraine can do without Donbas coal, but it would cost it the equivalent of US$551 million, which would be passed on to the economy and consumers, Nasalyk has said, according to UAWire.

Ukraine’s stocks of coal will be able to provide enough energy for thermal power stations until the end of the winter, but in the case of a complete blockade, coal inventories will be zero by the end of March, according to Nasalyk. Should an agreement be reached, it would take at least 50-60 days for coal to arrive in Ukraine, the minister added.

By Tsvetana Paraskova for Oilprice.com

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