Companies begin first gas exports from Ukraine to Hungary

LONDON (ICIS)–Three companies active in Ukraine broke new ground on Friday, starting the country’s first ever exports to Hungary.

Maksim Dmytruk, director of Ukraine-based TAS Energy told ICIS his company sold gas to UK-Metalex, a London-based company on the Ukrainian virtual trading point (VTP), which UK Metalex then sold to Hungary.

The gas, which amounted to 1MWh, was due to be delivered in backhaul mode into Hungary on Friday between 14:00-15:00 Kyiv time.

Dmytruk said the volumes were small and purely for testing purposes, but added that Ukrainian companies were gearing up for active exports into Europe, once the country has more volumes than it needs.

TAS Energy reached a first milestone in January when the company did similar gas export tests to Slovakia.

Ukraine is currently exporting natural gas to Hungary, Slovakia and Poland. However, this is Russian gas that is transited via the country as part of a long-term agreement with Gazprom, which ends this year.

Since 2015 when Ukraine stopped offtaking Russian gas, the country has imported gas from the three neighbouring countries.

However, as the transit contract ends and Russian volumes may be diverted to NordStream 2 from next year and as Ukraine is looking to boost its own local production, local and regional companies see an opportunity in ramping up exports to Europe.

On the one hand, the transmission system operator Ukrtransgaz is encouraging European shippers to store gas in its 11 facilities, which have a total capacity of 31 billion cubic metres (bcm). This means that importing as well as exporting activities would pick up.

On the other hand, Ukraine is looking to boost its production by 5% this year and ramp up output to 35bcm annually by 2030, as it opens up its upstream sector to international investments.

Ukraine has one of Europe’s largest oil and gas reserves, its overall conventional reserves being estimated at 905bcm. It is also thought to have close to 3.6 trillion cubic metres (tcm) of shale gas and another 1.3tcm of tight gas, but its production and exploration had lagged behind in the last few decades as the country had been heavily dependent on Russian gas imports.

The government is in the process of holding three concession auctions for 30 blocks in seven regions across Ukraine. The first round of ten blocks was held at the beginning of March.