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Market News Get ready for winter! Zelensky: Ukraine to suspend gas and coal exports

Get ready for winter! Zelensky: Ukraine to suspend gas and coal exports

As Ukraine's domestic coal production is relatively insufficient, it cannot fully meet domestic demand. In recent years, Ukraine still imports about 20 million tons of coal from Russia, Kazakhstan, the United States, Colombia, Canada and South Africa every year. On the gas side, Ukraine’s gas consumption was 26.8 billion cubic meters last year, according to the Ukrainian Gas Transmission System (GTS). That figure is almost double the country’s domestic gas production, which totaled 13.67 billion cubic meters last year, according to Naftogaz.

2022-06-08
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According to Ukraine's "Kyiv Independent" report, Ukrainian President Volodymyr Zelensky said in a video speech on the 7th local time that the country will limit energy exports to prepare for the next heating season.

Zelensky pointed out, "The government will establish a preparatory command for the next heating season, which is a decision made at a meeting with the government. We discussed the purchase of the necessary amount of natural gas and coal, and Ukraine will suspend the export of natural gas and coal. , to meet domestic supply.”

Zelensky expects Ukraine to experience its most complicated winter since independence this year. However, he did not specify when exports would stop.

Zelensky also pledged in his speech that the Ukrainian government will work to keep utility prices roughly the same as before the war, in order to ease the financial pressure faced by Ukrainian citizens.

Regarding the current Russian-Ukrainian conflict, Zelensky said victory should be won on the battlefield, but he also said he was open to peace talks with Russian President Vladimir Putin.

Coal is the main energy source in Ukraine, accounting for more than 70% of primary energy consumption for a long time, and it is mainly used for thermal power generation. And while Zelensky's latest speech on Tuesday declared that the country would seal the door on exports of natural gas and coal, the country had previously depended on imports of these two types of energy.

According to the Ministry of Energy of Ukraine, in 2021, Ukraine's coal production will be 29.39 million tons, a year-on-year increase of 2%. Among them, the output of thermal coal was 22.15 million tons, a year-on-year decrease of 2.3%; the output of coking coal was 7.23 million tons, an increase of 18% year-on-year.

However, due to the relatively insufficient domestic coal production in Ukraine, which cannot fully meet domestic demand, Ukraine has still imported about 20 million tons of coal annually from Russia, Kazakhstan, the United States, Colombia, Canada and South Africa in recent years.


On the gas side, Ukraine’s gas consumption was 26.8 billion cubic meters last year, according to the Ukrainian Gas Transmission System (GTS). That figure is almost double the country’s domestic gas production, which totaled 13.67 billion cubic meters last year, according to Naftogaz.

Ukraine is discussing with the U.S. the possibility of buying and paying for LNG supplies in lieu of the country’s purchases of gas via pipelines in Europe, Ukrainian Oil and Gas CEO Vitrenko said in an interview this week. Ukraine needs to import gas worth $8 billion during the next heating season, and U.S. LNG will be able to cover Ukraine's demand for gas imports.

Ukraine stopped buying direct gas from Russia in 2015, leaving the country largely dependent on "reverse gas supplies" from Europe.

Reverse gas supply means that the original consumers (European countries), after taking ownership of the gas (mostly from Russia), reverse supply to Ukraine. However, as the price of natural gas in Europe has soared this year due to the conflict between Russia and Ukraine, and Europe itself is planning to cut ties with Russian energy, Ukraine's energy security is facing an unprecedented threat.

Article source: Financial Associated Press
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