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Europe fears a gas crunch begin: What does it mean for Ukraine?

Author : 112.ua News Agency

Source : 112 Ukraine

In European markets, gas prices rise daily before the start of the heating season
22:00, 17 September 2021

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It is on the basis of exchange quotations that the gas price is determined, at which Naftogaz sells blue fuel to heat producers and household consumers. Should Ukrainian consumers panic about future gas payments?

We understand what caused the gas crisis in Europe and how it could affect other utility bills of Ukrainians, for example, for heat.

Related: Gas in Europe already costs about a thousand dollars. Will the crisis affect Ukrainians' payments?

Gas prices in Europe approached a thousand dollars

Gas prices in Europe hit new records every day. So, yesterday during the auction, the record price was updated, exceeding $ 800 per 1,000 cubic meters. m., the day before - $ 750.

Today the price has become sky-high: the cost of the October futures on the Dutch TTF index on the ICE Futures gas exchange has reached $ 950 per thousand cubic meters.

"The wholesale price of European gas is now higher than the price of Brent crude oil ever was during the 2008 surge. This is to understand the magnitude of the crisis," Bloomberg Energy Correspondent Javier Blas said on Twitter.

The main factor behind the price increase is the low level of gas reserves in underground storage facilities in Europe with limited supply.

Amos Hochstein, senior adviser to the US State Department for energy, said that the volume of gas supplies from Russia has decreased compared to traditional levels. The expert believes that by its actions on the gas market, Moscow has contributed to the growth of its market prices.

The head of Naftogaz, Yuriy Vitrenko, explained that gas prices in Europe were the result of Gazprom's blackmail and the creation of an artificial shortage.

"Today, for justified reasons, they do not certify, they do not allow Nord Stream 2 to work, Gazprom is thus blackmailing the whole of Europe, saying that you will not receive additional volumes if you do not allow Nord Stream 2 to operate," explained Vitrenko.

Related: Gas prices in Europe grow due to Gazprom blackmail, - Naftogaz-Ukraine CEO

Gazprom this year has booked 40 billion cubic meters of gas (one and a half times less than last year) for transit through the territory of Ukraine. Thus, the Russian Federation wants to convince the European Union to fully certify Nord Stream 2.

When will gas tariffs rise?

Despite the rise in the price of natural gas in Europe, Prime Minister Denys Shmygal promised during a press conference the day before that the price of gas for household consumers would not change.

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The price will remain the same as was fixed in the annual tariff of gas supply companies until May 1, 2022. For example, for NJSC "Naftogaz" this price is 7 UAH 96 kopecks. Most gas supply companies also have a price fixed at around 0,7 USD.

Further, the contracts will be reviewed and the next annual contract will be offered.

However, this situation is only for the population. Budgetary institutions are forced to buy gas at market prices.

Related: Gas price in Europe exceeds $950

What will happen to the heating?

In turn, the price of heat for the population may change. The heat tariff directly depends on the price of natural gas.

According to the law, tariffs remained the responsibility of local governments, there is no prohibition on changing them. In addition, prices will increase as it was planned from October 1, 2021 in accordance with the Cabinet of Ministers decree No. 859 (August 11, 2021).

At the same time, the Cabinet of Ministers says that there are no grounds for raising tariffs.

“If one of the mayors of the city is ready to take responsibility and raise tariffs in front of the people in this difficult time, I think, firstly, people will assess such mayors immediately. Secondly, all the necessary actions have been taken by the government. so that this does not take place ... If one of the mayors does this, we will sit down and conduct a dialogue ... As long as the mayors of the cities where Teplokommunenergo operate want to raise tariffs ... we have not yet communicated with such mayors," PM explained.

Shmygal also said that Teplokommunenergo has no reason to increase tariffs for heat and hot water because of the actions taken by the government on the debts of TKE and the gas price fixed for them.

“The government has taken all measures to prevent this from happening. We are fulfilling our obligations under the memorandum, we are giving more than USD 1,1 billion to TKE to put things in order there, and we also made the price of gas without VAT 0,2 USD / cubic meter, which for in many cities there are fewer than the tariffs for heat," Shmygal said.

Related: Price on gas for Ukrainian population to remain unchanged until May 2022, - PM

At the same time, in some heat exchangers, the heat tariff remains at the level of 0,15 USD. The prime minister noted that in such cases "it will be necessary to look for mechanisms to compensate for the difference from local budgets and, possibly, from the state."

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