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Citing pressure majeure of Russia’s invasion, Ukraine turns off fuel move

Ukraine stopped the move of Russian pure fuel to Europe on May 11 by way of the cross-border Sokhranivka station, blaming Russian-backed separatists of siphoning provides.

Gas TSO of Ukraine (GTSOU) reported the incidence of pressure majeure, which makes it unattainable to additional transport fuel by way of the Sokhranivka and the border compressor station (CS) Novopskov, that are within the occupied territories. “CS Novopskov is the first compressor station of the Ukrainian GTS in the Luhansk region, through which almost a third of gas from Russia to Europe (up to 32.6 million cubic meters per day) is transited,” GTSOU mentioned in an announcement.

Noting that a number of GTS amenities are in territory briefly managed by Russian troops and the occupation administration, GTSOU mentioned it can not presently perform operational and technological management over the CS Novopskov and different belongings situated in these territories. “Moreover, the interference of the occupying forces in technical processes and changes in the modes of operation of GTS facilities, including unauthorized gas offtakes from the gas transit flows, endangered the stability and safety of the entire Ukrainian gas transportation system,” GTSOU mentioned.

“To fulfill its transit obligations to European partners in full and following the terms of the agreement, it is possible to temporarily transfer unavailable capacity from the Sokhranivka physical interconnection point to the Sudzha physical interconnection point located in the territory controlled by Ukraine,” Gas TSO of Ukraine mentioned.

Katja Yafimava, a senior analysis fellow on the Oxford Institute for Energy Studies, informed New Europe on May 11 most of Russian fuel flowing to Europe by way of Ukraine goes by way of the Sudzha entry level whereas a a lot smaller quantity goes by way of the Sokhranivka entry level en path to Moldova/Romania. “As it is a very small volume its impact on the European gas market is limited, but the very fact of transit stoppage is likely to make the market worry that under certain conditions transit could also be stopped in respect of much larger volumes at Sudzha – and when the markets worry, prices rise,” Yafimava mentioned.

European pure fuel costs jumped as some Russia fuel transit volumes had been disrupted.  The benchmark contract surged 14% as flows from Russia by way of Ukraine fell additional on May 12, Bloomberg reported, including that Dutch front-month fuel, the European benchmark, rose as a lot as 22% on May 12 and settled at €106.701 per megawatt-hour. The UK equal was up 26%. German energy additionally surged, with subsequent month’s contract rising as a lot as 17%.

The Oxford knowledgeable defined that usually within the occasion of any dispute, transit should not be lowered/stopped till a dispute decision process has been accomplished. She famous that events can try and settle their dispute bilaterally inside a sure interval and, failing that, submit it to arbitration.

“GTSOU press release cites force majeure circumstances in respect of transit via Sokhranivka; on its part, (Russian gas monopoly) Gazprom denies it has received any confirmation of such circumstances. Generally, a company can issue a notice of contract termination using its force majeure clause. Should the transit contract be terminated, there would be no legal basis for transiting Russian gas across Ukraine through any of the entry points,” Yafimava informed New Europe.

Meanwhile, the European Council on May 11 reached a mandate for negotiations with the European Parliament on a proposal on fuel storage. To enhance EU safety of provide within the present geopolitical context, the proposal goals to make sure that fuel storage capacities within the EU are crammed earlier than the subsequent winter season and will be shared between member states in a spirit of solidarity, the EU Council mentioned in a press launch, including that the mandate was agreed by the representatives of the member states in Coreper.

The mandate specifies the principles for underground fuel storage and prospects for counting shares of liquefied pure fuel (LNG), whereas limiting obligations to a sure quantity of the annual fuel consumption of the member states over the past 5 years, to keep away from a disproportionate impression on sure member states with a big storage capability.

As not all member states have storage amenities on their territory, the mandate stipulates that member states with out storage amenities can have entry to fuel storage reserves in different member states and should share the monetary burden of the filling obligations, the Council mentioned.

Member states have additionally agreed on obligatory certification for all storage system operators with a view to keep away from potential dangers of exterior affect on important storage infrastructures, which might jeopardize safety of power provide or another important safety curiosity, the Council mentioned, including that member states agreed that the filling obligations would expire on December 31, 2026. Finally, the mandate gives for a derogation to be granted to Cyprus, Malta, and Ireland so long as they don’t seem to be straight interconnected with the fuel system of different member states.

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