Ukraines state owned pipeline company still transports Russian gas to Europe.jpgw1440

Ukraine’s state-owned pipeline company still transports Russian gas to Europe

A month into the war, the state gas company offers a glimpse into the geopolitics of the conflict and the extent of Ukraine’s destruction. Naftogaz serves 12 million homes, Vitrenko said, but it has been forced to cut off 300,000 that were severely damaged by Russian missiles.

“If we can’t fix them, we have to shut them down,” Vitrenko said of the gas connections. “Sometimes a whole block [can be affected]. It can also be dangerous.” In the early days of the Russian invasion of Ukraine, two workers from the company were killed at a heating plant in Kherson, he added.

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Naftogaz is also involved in a complex geopolitical game. Even if Russia rains missiles on Ukraine, it still sends about 30 percent of the gas it sells in Europe through the country it has entered. And although Ukraine’s leaders have urged the continent to immediately halt imports of Russian gas, they are doing nothing to stop gas flowing through pipelines at a rate of 40 billion cubic meters a year to customers like Germany, Austria, Italy, Slovakia, Hungary and Czech Republic.

“It is a very politically sensitive issue that is being discussed at the highest political level,” said Vitrenko. “We are trying to convince our partners in the European Union that they should reduce all purchases of Russian gas and oil, or at least freeze all money Russia gets for energy exports.”

He said the money owed to Russia could go into escrow accounts.

When Ukraine has unilaterally taken the initiative and stopped the transit of natural gas supplies from Russia, Vitrenko said, gas supplies are diverted to other pipelines and still reach Europe. That could make Ukraine even more vulnerable to Russian bombs, he added.

“Then stopping Russia from getting money for its energy exports doesn’t help us, but there is also an increased risk for Ukraine’s gas infrastructure,” he said. “We see that as a deterrent [against] more bombing and more destruction in Ukraine.”

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Many energy analysts have said that Russia has maintained its natural gas supplies through Ukraine to demonstrate its reliability as a supplier fulfilling long-term contracts. In January 2020, the two nations signed a five-year deal for the volume now flowing through Ukraine’s pipelines.

But Vitrenko said he didn’t see it that way. “There is a simpler, more direct explanation: Russia receives half a billion to a billion dollars a day for energy exports,” he said. If Russia reduced its exports, “it would not be able to fund the current war, pay salaries to its soldiers and all the crowds currently supporting Putin. It will immediately impact support for the regime, which is why they don’t want to disrupt that revenue stream.”

Anders Aslund, a senior fellow at the Stockholm Free World Forum and a longtime expert on Russian affairs, said keeping the gas flowing will benefit both countries – Russia by selling the gas at high prices and Ukraine by charging transit fees.

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“If Europe continues to import gas from Russia, why shouldn’t Ukraine benefit?” Aslund said, noting that the International Monetary Fund had forecast last week that Ukraine’s gross domestic product could fall by 13.5 percent if fighting soon begins would stop up to 35 percent this year if there is a prolonged conflict.

Amy Myers Jaffe, executive director of the Climate Policy Lab at Tufts University’s Fletcher School, said another reason to keep gas flowing is that Russia’s state-controlled gas company Gazprom has obligations to companies in Europe.

“Gazprom would pay billions in financial penalties if it failed to meet its contractual obligations,” she said. “Maybe the Kremlin doesn’t want to have to save them.”

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Ukraine, she added, “needs and wants NATO support and therefore cannot take action to anger the apple cart by cutting off Germany’s gas supply.”

Russia now transports some of its gas through newly built pipelines, such as one that crosses Turkey to southern Europe. In October, Russian President Vladimir Putin has said the degree of “attrition” in Ukraine’s transport system has prompted it to reduce gas volumes in its recent deal with Ukraine.

Declining appetite of Ukraine because natural gas has also played a role in gas flow in the last decade or two. It once used 50 billion cubic meters a year, with the annual production of 20 billion cubic meters. Before the Russian invasion, it had reduced its consumption to just 30 billion cubic meters per year and reduced its dependence on imports by two-thirds.

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Still, The conflict is fueling ever-increasing greenhouse gas emissions as Russian missiles hit oil and gas infrastructure.

Less than five months ago, representatives from around the world gathered at the UN climate summit in Glasgow, Scotland, to set limits on greenhouse gas emissions. Ukraine, along with more than 100 other nations, has signed the Global Methane Pledge to reduce emissions of the potent greenhouse gas by at least 30 percent by 2030. Russia did not, despite the fact that there have been large methane leaks at production, compressor and distribution sites along its vast pipeline network.

A few months before Russia invaded Ukraine, Ukraine had unveiled a new compressor station that reduced emissions there by 90 percent, Vitrenko said. There is an ongoing program to replace leaking metal pipes with modern plastic pipes, he added, and Naftogaz has used robots to inspect pipes and detect defects in its distribution network.

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“This was less due to environmental concerns and more to economic concerns,” said the Naftogaz board.

Now the world looks different, said Vitrenko. “This green transition should also focus on geopolitical sustainability, and it’s really intertwined with environmental sustainability.”

Recently, Russian forces bombed what Vitrenko called “rather large pipelines” for several days. “We couldn’t stop the fire,” he said. “You can imagine how much methane is being emitted over there.”

He said a Russian missile struck an oil reservoir just a few kilometers from the shelter where he was hiding. “So you can imagine environmental damage,” he said.

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In light of the recent fighting, Ukraine’s priorities have been changed.

“The country is at war and Ukraine is still home to tens of millions of people who need heating, water, electricity and some essential utilities,” Vitrenko said.

This was a daunting prospect under normal circumstances. Now, he said, international donors must not only focus on food aid but also support Naftogaz, the country’s largest state-owned utility.

“If there’s a war, your expenses go up. People can’t pay,” Vitrenko said. “It’s no longer a business. Basically, it is humanitarian aid.”