Author Topic: The Annual Gas Crisis: Will January 2009 Be the Worst Ever?  (Read 41515 times)

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Offline David Rochlin

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 As for the containers, most of these would appear to be of Chinese origin and therefore not up to the hard winter here. The Turks in 7km market sell the thinsulate ranges of clothing.



Oh, I meant that some of those containers stacked up at the port are probably full of warm fur coats or some such and might get liquidated, including the contents.
   I keep meaning to visit 7km...

Offline EnglishMKyiv

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Don't panic boys and girls Ukraine has 17.2bn cubic metres of gas in storage ... the bunkers are all full. At current usage this is enough to last for 3.7 months by which time it will be spring - the next tranche of IMF money will have arrived and it will be problem over for another year.

Joe
« Last Edit: 12:23 21-Dec-2008 by EnglishMKiev »
We live only to discover beauty. All else is a form of waiting.

Carlusha

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 As for the containers, most of these would appear to be of Chinese origin and therefore not up to the hard winter here. The Turks in 7km market sell the thinsulate ranges of clothing.



Oh, I meant that some of those containers stacked up at the port are probably full of warm fur coats or some such and might get liquidated, including the contents.
   I keep meaning to visit 7km...

Buses every few minutes from just outside the station. With your back to the station, on the front right hand corner. You will see queues (lines) but you will not have to wait long. Buses drop you right at the market. An experience to remember but go early and wrap up well!

Fur coats, leather coats, thermal underwear, kitchen sinks, Puzata Hata gift vouchers ............ 7km has 'em all.


http://www.7km.net/


(Sorry, K) Wiki has this to report - http://en.wikipedia.org/wiki/Seventh-Kilometer_Market

Offline David Rochlin

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Don't panic boys and girls Ukraine has 17.2bn cubic metres of gas in storage ... the bunkers are all full. At current usage this is enough to last for 3.7 months by which time it will be spring - the next tranche of IMF money will have arrived and it will be problem over for another year.

Joe


That would seem to resolve the matter.  Enough gas means that Ukraine won't have a disruption, at least nothing widespread.  Ukraine uses about 73 bn cubic meters of gas per year.  I guess with a lot of industrial business, including the steel industry closing for the crisis, then that amount of gas will last a long, long time.
It is also interesting that Ukraine does produce something like 18bn cubic meters of gas, itself.
and the holding capacity of Ukraine's gas storage facilities is about 32 bn cubic meters.
With that much gas, Ukraine will have a much stronger negotiating position than I thought.
Yuschenko has been suggesting an increase in the price of using Ukraine's gas storage facilities, a network of pressurized caverns.  The price in recent years has been something like $6.80 per 1000 cubic meters.  Yuschenko wants Ukraine to charge the Western price of $80. 

richardm

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Yes but like I mentioned earlier, those of us who lived in Kiev when the last cut off happened can remember a marked drop in temperature from the radiators for those few days.

Ok there is a supply but dont expect the regular heat in your apartment if we are cut off again!

Offline yankee ne vod

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Don't panic boys and girls Ukraine has 17.2bn cubic metres of gas in storage ... the bunkers are all full. At current usage this is enough to last for 3.7 months by which time it will be spring - the next tranche of IMF money will have arrived and it will be problem over for another year.

Joe

How do you know this Joe?  You in the Business?  Not questioning you by any means by the way, I am just curious.  I have an acquaintance over there who is in the Oil Biz. (not my gal)

Carlusha

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Don't panic boys and girls Ukraine has 17.2bn cubic metres of gas in storage ... the bunkers are all full. At current usage this is enough to last for 3.7 months by which time it will be spring - the next tranche of IMF money will have arrived and it will be problem over for another year.

Joe

How do you know this Joe?  You in the Business?  Not questioning you by any means by the way, I am just curious.  I have an acquaintance over there who is in the Oil Biz. (not my gal)

Joe, an oil man? Well, he may know something about oil but he introduced himself as an investment banker!

Regarding the amount of gas in storage, this has been widely reported in the media and also by Yushenko on TV recently.

Offline EnglishMKyiv

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I am not in the Oil business .... I work for an American owned Ukrainian investment bank.

Each morning we have an analyst briefing on the trading floor to make sure we at least have a rough idea what is going on in the world.

The numbers I quoted, 17.2bn cubic metres of gas and this being enough to keep Ukraine going for 3.7 months come from our Energy Analyst - where he got the figures from I have no idea but his job to advise us traders and our clients all matters pertaining to Energy not just in Ukraine but in the whole CIS.

We have 9 analysts working away in our research department so it usually means I can find answers to most questions.

Joe
We live only to discover beauty. All else is a form of waiting.

Offline David Rochlin

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The numbers I quoted, 17.2bn cubic metres of gas and this being enough to keep Ukraine going for 3.7 months come from our Energy Analyst - where he got the figures from I have no idea but his job to advise us traders and our clients all matters pertaining to Energy not just in Ukraine but in the whole CIS.

This link supports EnglishMKiev's Statistic:

http://www.ukrinform.ua/eng/static/subjects/arh/08-11-24.html

Offline EnglishMKyiv

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And rather bizarrely my radiators were too hot too touch over the weekend ... this really annoyed my cat as she has been enjoying sitting on them over the past week or so when they were merely warm and now they are too hot ... or maybe we are just lucky in Podil
We live only to discover beauty. All else is a form of waiting.

Offline David Rochlin

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The numbers I quoted, 17.2bn cubic metres of gas and this being enough to keep Ukraine going for 3.7 months come from our Energy Analyst - where he got the figures from I have no idea but his job to advise us traders and our clients all matters pertaining to Energy not just in Ukraine but in the whole CIS.

This link supports EnglishMKiev's Statistic:

http://www.ukrinform.ua/eng/static/subjects/arh/08-11-24.html

Really, Russia's negotiating position might even be bad, given this data.  For example, if Russia does turn off the gas, and Ukraine follows up by immediately turning off the tap to Western Europe, then while Ukraine stays warm, and holds up payments, Russia would have to go without payment for over three months before Ukraine's negotiating tactic would literally run out of gas.   Perhaps Russia is the country that can't afford not to deal.  With Oil down, EC cash for high (now overpriced) gas is a much more important source of revenue.  And what would a disruption, especially a prolonged one, do to the Ruble and Russian currency reserves.  Of course, Russia has had a sort of slapstick foreign policy in recent years.  Energy diplomacy has been the one great card they have had to play.  Now, if they play it, everyone will know it is a bluff. 

Offline EnglishMKyiv

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Don't give them ideas David - your scenario would not do very much for the sake of positive relations with our neighbours over the border.

Although you are correct of course - Ukraine is not completely helpless and will probably not be trampled on. Admittedly we have not paid for most of that 17.2bn cubic metres yet - but we have it here now ... and they don't ;-)

Joe
We live only to discover beauty. All else is a form of waiting.

richardm

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Who cares!!!! Just a good excuse to have an early night under the warm sheets with a devushka ;)

Come on Medvevev do your worst son  ;)

Offline David Rochlin

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Gazprom Blames Ukraine:
Ukraine will be the scapegoat for the whole economic crisis in Russia.  Ukraine won't just be a customer who pays late, Ukrainians will be the root cause of unemployment in Russa.
  That is how Russia is framing the situation, when the dispute escalates next month.
And of course Russia will blame Ukraine for the gas shortage in Western Europe, when Russia and Ukaine both turn off the tap.   The situation in Western Europe will depend upon what quantities of gas they have stored, themselves.  Obviously they will be using less for manufacturing, as will Ukraine.
   Given Ukraine's massive storage of gas, political pressure on Ukraine, from the Euro zone, could be the biggest impetus pushing Ukraine to resolve matters.
However, this could be Ukraine's best shot to join the EU.  One or two shivering months would convince several reluctant countries. 
   If an agreement is not reached:
   Russia's political campaign is more ominous than a gas shut off.    Remember how the dispute with Georgia escalated.  One of Russia's first actions was to confiscate property, even apartments, owned by Georgians in Moscow. 
Since Gazprom has accused Ukraine of robbing the Russian workers, already, it seems like the dispute will go to trade sanctions by Moscow, against Ukraine, rather quickly, then possibly to confiscation of property.

http://www.forbes.com/markets/2008/12/23/gazprom-ukraine-update-markets-equity-cx_po_1223markets06.html

Offline David Rochlin

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the Kremlin-based midget: "This means that despite the current problems in finances the era of cheap energy resources, of cheap gas, is of course coming to an end," to the GECF (Gas Exporting Countries Forum, the OPEC-esque, cartel wannabe which includes Iran among others.)

http://www.businessweek.com/globalbiz/content/dec2008/gb20081223_503103.htm?chan=globalbiz_europe+index+page_top+stories

Western Europe's "Market" contracts, peg the price of gas to the price of oil.  If Russia honors those contracts, then the price of gas in Western Europe will plummet within five months.  Russia's demands for higher prices to Ukraine on the basis of the Euro zone price, will be undermined completely.
Does this suggest that Russia will renig on contracts with the West in five months?
Will Ukraine base its own negotiating strategy on demanding simply to be pegged to the Western European price?
   Western Europe is rather dependent upon Russian gas, Gas transported through Russia, and replacing the source would be difficult, in the intermediate term.

However, the U.S. has pioneered deep drilling underneath shale deposits, and found vast reserves of gas which likely exist under similar rock formations around the world.  These reserves are so vast in the United states, that they provide decades, at least of supplies to the U.S. at current prices.  These resources are not pie in the sky, but are being exploited in Texas already and have driven U.S. prices down, even before the financial crisis.  Exploration is not far along in any part of Europe, but based on the similar geology, it seems likely that almost every country in Europe has enough gas under shale rock, to be self sufficient with Natural gas, for decades.   And certain countries, Russia, Poland and Germany, probably will have huge exportable reserves.  Russia will have the most, probably Poland will be number two. 
Ukraine will likely have enough to meet domestic needs, but is not likely to have huge reserves.
http://www.npc.org/Study_Topic_Papers/29-TTG-Unconventional-Gas.pdf