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Ukraine Has Only 4 Months Of Gas Stocks Without Russia

Tyler Durden's picture




 

Having explained the Ukraine "situation" in one map, it appears the inter-connectedness of Ukraine and Russia is becoming any increasingly problematic part of the current crisis. As Reuters reports, absent Russian gas, Ukraine's natural gas stocks can meet just 4 months of demand. The modest silver-lining is that the stocks are generally in the west of the country (away from potential Russian intervention) but it bears noting that Ukraine meets around half its gas demand through Russian imports (and Russia has cut supplies in the past). The situatio is not just energy though as Bloomberg notes, that Ukraine relies on Russia for about 30 percent of its global trade activity, compared with Russia’s 6 percent dependency on Ukraine.

 

Sadly, everything you need to know about the crisis in Ukraine in one worrisome map which summarizes all the relevant "red lines."

To prepare for a potential disruption, Ukraine's gas transit monopoly Ukrtransgas has been increasing its gas imports from Russia in recent days, increasing its stocks which now stand at four months worth of supplies, several industry sources said.

Of Ukraine's 33 billion cubic metres (bcm) storage capacity, Gas Infrastructure Europe (GiE) data shows that around 80 percent is in its far west, so even in the case of a Russian intervention in Ukraine's predominantly Russian east, most storage assets would likely remain safe from seizure.

Analysts also say that a continuation of gas supplies was in the interest of all parties.

"Until a real war, I think that all sides (Russia, Europe and all parties in Ukraine) have a vested interest in flowing gas from Russia to Europe," said Thierry Bros, senior gas analyst at French bank Societe General.

"Russia needs the money from gas sales, Europe is 26 percent dependant on Russia for its gas consumption, and Ukraine need the money from the transit fees," he added.

 

Ukraine's Reliance on Russia goes far beyond just energy...

A conflict between Russia and Ukraine would have a more substantial impact on Ukraine in terms of trade dependency. Trade-flow data show that Ukraine relies on Russia for about 30 percent of its global trade activity, compared with Russia’s 6 percent dependency on Ukraine. The European Union overtook Russia as the larger destination for Ukraine’s exports in January 2013 on a 12-month rolling basis.

 

Still, more than a quarter of Ukraine’s exports are still consumed by Russia. Ukraine depends on Russia for about a third of its total imports. Russia’s reliance on Ukraine is much less, with 6 percent of the country’s exports being consumed by Ukraine and about 5 percent of Russia’s imports coming from Ukraine.

 

The chart illustrates how trade dependencies between Ukraine and Russia have changed during the past 10 years.

And it's not just Ukraine that faces a problem...

In western Europe, a mild winter and improved infrastructure mean Europe is less reliant on Russian natural gas pumped through Ukraine than in past years, easing worries that the escalating crisis in Ukraine could hurt supplies.

 

Despite the improved situation, analysts warned that a renewed disruption would hit Europe hard.

 

"Risks for Europe exist always, that is why it should pursue even more diversification projects further and develop liquefied natural gas (LNG) markets and new connectors in central and southeastern European regions," said Anna Bulakh of the International Centre for Defence Studies.

 

However, Ukraine has another big problem - while it would like $3bn in IMF loans, that will not even cover interest and principal payments through June...

 

What is perhaps most ironic is the mainstream media's attention to a 12% drop in the Russian stock market. If this occurred in the US, it would be the end of the status quo... Putin does not care about Russian stocks... all he cares about is the price of oil. Sanctions would merely raise oil prices as supply would be cut... raising the value of Russia's resources - and we are sure the Chinese would be more than happy to buy (in Yuan-terms) crude direct from Russia as the rest of the world shuns them (and faces crushing energy costs).

 

Source: Bloomberg

 

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Mon, 03/03/2014 - 17:42 | 4503585 Iam Yue2
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I read with interest in Pig Weekly, that Russia Deputy PM Rogozin, has tweeted information regarding outbreaks of Africa Swine Fever in Ukraine, giving rise to very real fears that Russia may be about to block imports of pork from Ukraine. #swines

Mon, 03/03/2014 - 17:46 | 4503605 MonsterBox
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FWIW, the US doesn't go to/from the Space Station without Russia.  Just sayin'....

Mon, 03/03/2014 - 17:59 | 4503651 knukles
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John Kohn is going to promise The "The Ukraine" a bazillion dollars to help support their revolution of freedom love diversity and all that horseshit, in order that the Ukies pay the EU banks so the EU banks don't go EU bust which if they do go EU bust means that all the EU bank debt/etc. owned by the US banks don't make the US banks go US bust.
See everybody's hearts and minds follow the "The Vladster" because when Vlad's go em' by the balls their hearts and minds inevitably follow, as was taught the world by Haldeman, Erlichman and Dean, et al.

Where the fuck is Jimmy Carter when we need him?.

PS  See that's why the diverse, love, peace and bend over lefties named the Space Station "International" because we don't own it anymore.  All them Ruskies and Aliens (no green card required) coming to a Discovery series next season.

Mon, 03/03/2014 - 18:07 | 4503699 Thought Processor
Thought Processor's picture

 

 

Ukraine not the point.

 

How much does Europe have?

Mon, 03/03/2014 - 20:00 | 4504272 zyby
zyby's picture

If it gets to war, it'll be over a lot sooner than 4 months. The gas supply should be the least of Ukraine's worries.

Mon, 03/03/2014 - 21:07 | 4504469 Not Too Important
Not Too Important's picture

ATTENTION: ONE WEEK ONLY

If anyone wants to know what is going through Putin's head right now, and the head of everyone that considers themselves Russian-blooded, go see 'Stalingrad' at your local IMAX. It is a phenomenal movie, far better than 'Enemy At The Gates', and that was a great movie.

You will very clearly see why Putin will never put up with any Western shit again. Ever. And the entire country is behind him.

And to think the newly 'installed' leaders of Ukraine are neo-Nazis . . .

This movie will clarify just about everything.

 

Mon, 03/03/2014 - 18:01 | 4503677 Urban Redneck
Urban Redneck's picture

FWIW, the caterers in Brussels neither cook nor deliver to either NATO or the EUroCraps without Russia. Just sayin'....

Mon, 03/03/2014 - 19:11 | 4504058 Freddie
Freddie's picture

All the old Germans who made NASA actually work are dead now.  The only guy in the USA that good is Burt Rutan and he thinks NASA is a joke.

Mon, 03/03/2014 - 20:39 | 4504390 silvermail
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Putin can isolate the United States from around the world faster than you can spit. To this end, Putin needed only to declare that Russia sells oil and gas only for gold.
After that, the U.S. is becoming a third world country immediately. Check and mate.

Tue, 03/04/2014 - 06:41 | 4505820 silvermail
silvermail's picture

Putin's adviser on economics Sergei Glazyev said:
- Russia will abandon the dollar.
- And also Russia will create its currency system , together with China and other countries.
- And also Russia will abandon all public U.S. Treasuries.
- And also Russia will refuse to return any U.S. loans.
- And also Russia will arrest all assets of the United States and the West.
- And also Russian will stop all Russian oil and gas supplies to Europe. Oil and gas from Russia will go to China.
- And also Russia already has banned the import of meat from the United States.
Goodbye dollar, hello gold. Goodbye to the United States and the West, hello China and East.

http://x2t.com/287425

Mon, 03/03/2014 - 21:08 | 4504473 Not Too Important
Not Too Important's picture

A lot of early US Special Forces (all branches) after WWII spoke German. Jus' sayin' . . .

Mon, 03/03/2014 - 17:55 | 4503648 TideFighter
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The Bear and the Dragon against the community organizer. Odds?

Mon, 03/03/2014 - 18:01 | 4503672 knukles
knukles's picture

It is illogical to place a bet assuming a potentially unlimited downside.

Mon, 03/03/2014 - 18:03 | 4503683 disabledvet
disabledvet's picture

well...at least the Rushin' Army Division won't need a map.
"Just follow the gas lines."

Again..."and then what"?

Mon, 03/03/2014 - 18:00 | 4503673 onewayticket2
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odds are that obama will convene a task force to study the issue.  results (after gas runs out) by 3Q.

Mon, 03/03/2014 - 18:18 | 4503746 disabledvet
disabledvet's picture

there are at least a DOZEN International Organizations that exist in Europe alone to prevent this from happening.

Stating "it is done" is...well, let's just say "this worries the neighborhood" since the last time Europe went through this "it was called World War II."
This does not feel like President Putin is in charge of the situation.
Are there militia's now spreading out in Ukraine and elsewhere here?

The Russians might be walking into what they perceive to be a "trap."
I still don't understand why Russia hasn't made their intentions known in this matter either. This seems to be not just an aggression...but an "open ended" one as well...one that invites further escalation...if not full scale "tit for tat" retaliation. "And, no...that wouldn't be coming from the USA" either.

The USA won't have any trouble raising an Army and sticking it in Lviv.
Is that the calculation?

Mon, 03/03/2014 - 18:26 | 4503793 CrashisOptimistic
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Sorry oneway, accidental downtick

 

Mon, 03/03/2014 - 19:07 | 4504044 aVileRat
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Depends if the Dragon can get over that whole dustup in the 1800's pre Rus-Jap war. and Russia trying to fuck them over in the MENA / Sukhoi JV projects. 

https://www.youtube.com/watch?v=-bm59rWJGCE

Rand did a good study back in 2003 and updated in 2008 (in response to Palin's comments) which maps out what a Ukr-Rus flashpoint would look like. The end of the story is that without an air-shield (S-400's chew up Boeing tech pretty good) the Ukranians will get curbstomped. Blowback from refugee flight alone estimates 5 million displaced peoples. So on average, about on par with a New Orleans style disaster.

If Putin does decide to stop at Armynsk, then the isle will be dependant on the Ukranians for power and food/material. Crimea is mostly a military port with logistics depots at Kherson and Odessa. So, unless Valad is planning on dropping a 9 billion dollar stimulus plan on making warehouses, power plants and starbucks shops, he will just have to continue pushing up-coast. The math says so. If he hated dealing with Kyiv for natural gas taxes, there is no way he will also add power & peaches to the list of things he must negotiate with Kiev.

Plus there is that whole thing with the Urea market. Odessa is one of the world hubs for Urea. You might think China is cool with buying cat piss on the open market, but one of the KEY reasons why they wanted potash was to NOT be giving 100% of their crop input cost to Putin's high school friends.

So given the study, and the fact nitrates are kind of a big deal for most of Asia, I could see this being an important point of calculus which will be weighed against Gazprom's cash flows and the logistics of his new territory. 

 

Tue, 03/04/2014 - 07:44 | 4505892 Reptil
Tue, 03/04/2014 - 01:22 | 4505349 Joenobody12
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LOL it is so funny if it is not so pathetic. God bless America, we need it.,

Mon, 03/03/2014 - 17:42 | 4503586 Rainman
Mon, 03/03/2014 - 18:26 | 4503744 CaptainSpaulding
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Yea, Im done here. Nothing left to do except eat a box of cookies whilst staring at the kitchen clock until i hear the knock. 

Mon, 03/03/2014 - 17:43 | 4503587 Debugas
Debugas's picture

Ukrain can run till october but that would mean tapping into winter reserves (underground reservoirs) meant for export to europe.

Pipes throughput can not deliver the quantities of gas needed for the winter season so reservoirs are filled up in the summer in advance

Mon, 03/03/2014 - 17:44 | 4503591 Quinvarius
Mon, 03/03/2014 - 17:44 | 4503592 IridiumRebel
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Translation: GO GET A FUCKIN SCHWINN AND LEARN TO GARDEN.

Mon, 03/03/2014 - 17:48 | 4503610 Muppet
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No worries.  They'll be part of Russia within 4 days, much less 4 months.

Mon, 03/03/2014 - 17:49 | 4503616 LawsofPhysics
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"Only" four months?  Shit, how long would southern california last if the keepers of the mighty colorado shut off the water.

Putan/Russia are fine, the community organizer is fucked.

Mon, 03/03/2014 - 17:49 | 4503620 kito
kito's picture

plenty of hot air to tap from the mouths of the politicians.............

Mon, 03/03/2014 - 17:52 | 4503622 Debugas
Debugas's picture

Putin talked today with Lukashenko and Nazarbayev (Belorussia and Kazakhstan) about brewing humanitarian catastrophy in Ukrain and what could be done about it

Apparently they are preparing to accomodate hundreds of thousands of refugees from Ukraine.

Mon, 03/03/2014 - 18:18 | 4503745 walküre
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Why would Western Ukrainians leave their farms? They can sustain themselves.

Some of the biggest farms are owned by Germans, Dutch and British farmers or investors. Why should they worry?

Big dairy production with exports into Europe as well.

Eastern Ukraine and industrial jobs are a different matter but leave the home to go into a Russian refugee camp in Kasak or Belarus? That's crazy talk.

Mon, 03/03/2014 - 17:53 | 4503639 BurningFuld
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Shouldn't these dumb fucks be thanking Putin for coming in and keeping law and order. Aren't there a bunch of radicals that would just love to shoot a few Russians in the Crimea??

Mon, 03/03/2014 - 17:54 | 4503645 buzzsaw99
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they should turn off the gas to crimea first. lulz

Mon, 03/03/2014 - 17:56 | 4503652 grunk
grunk's picture

Vodka reserves?

What about vodka reserves!?!

Mon, 03/03/2014 - 17:58 | 4503659 chunga
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Putin has every reason to be concerned about the spice price.

The Soviet Union, in large part, fell apart due a concerted effort by the west to drive prices down.

 

Mon, 03/03/2014 - 17:59 | 4503662 ebworthen
ebworthen's picture

Speaking of Ukraine, Viktor Yushchenko has been awfully quiet.

Watching the news from his state owned dacha in Koncha-Zaspa no doubt.

The gas valves will be the thumb screws on Western Ukraine and the EU.

Mon, 03/03/2014 - 18:05 | 4503693 resurger
resurger's picture

He's been busy fornecating with yulia


Mon, 03/03/2014 - 18:23 | 4503770 ebworthen
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Yes, some likely tete a tete's since she's been released from the pokey.

Mon, 03/03/2014 - 17:59 | 4503663 Oldwood
Oldwood's picture

The easiest way to permanently solve a disagreement is to just kill the opposition, otherwise you have to go through it all over again in a few decades. Of course that may well be the plan. War on a repeating basis. Population reduction and urban renewal. Everything to make a Krugman happy.

Mon, 03/03/2014 - 18:00 | 4503669 real
real's picture

I have a silly question.   First i don't believe there will be an escalation to the point of u.s. or nato over Ukrain only because there's still 14t in retirement funds still not in the hands of the wall st dummies. Unless of course a national emergency will enable the dummies to convert all these funds into treasuries for the sake of the homeland.

So heres my question,  is deflation in europe or on the radar in u.s. or some other very scary sign occurring that can not be avoided that Russia knows and with china and others making them ready to take the big leap ? cnn Seems to be making a case by telling the worshipers that unless we stop them, your 401 is gone becuase of the turmoil. And please lets all keep talking about the two times obama tried to start a war in Syria this past summer.  
Mon, 03/03/2014 - 18:03 | 4503686 resurger
resurger's picture

There will be only nukes. War is bullish

Mon, 03/03/2014 - 18:10 | 4503711 ebworthen
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Firstly, Russia is not willing to surrender Black Sea ports and the industrial capacity of Eastern Ukraine, not to mention natural resources and Russian speaking people loyal to Russia.

Secondly, the U.S. Dollar is on it's way out as reserve currency and the EU is a failing experiment grasping at straws.  It's a good time to have Gold, Energy, Resources, and Real Estate.

Russia also doesn't need NATO bases and missiles in it's backyard, what with China on the other side of them, and the radical muzzies and U.S. troops and drones to the south in Iraq, Afghanistan, Pakistan, etc.

Mon, 03/03/2014 - 18:23 | 4503783 walküre
walküre's picture

Way too one sided.... Russia isn't coming out as winner in this standoff. Russia's finances aren't glorious either. China is only able to keep their ponzi going because our money changers in charge are allowing it to happen. All currencies are basically a crap shoot but at least the US still has that reserve currency status. For how much longer, who knows?

The US can afford to trim alot of fat and outlast Russia or China who would already be deeply entrenched in public uprisings due to their desolate finances. Those two don't have much of a cushion when the Dollar goes boom.

Mon, 03/03/2014 - 18:32 | 4503833 CrashisOptimistic
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You do realize the US imports 7 million bpd?  Priced to Brent?

Mon, 03/03/2014 - 21:24 | 4504526 walküre
walküre's picture

What's your point? What difference does it make? The US financial and energy cartels are controlling the flow as well as the price of oil. Again, what is your point?

Maybe some here should get educated about recent Russian financial problems and their history with a fragile economy and currency.

Mon, 03/03/2014 - 18:53 | 4503976 ebworthen
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They have the cushion of industrial production and a more cohesive populace, especially if they stoke nationalism.

The U.S. has played the nationalism card about three times too many, and is a corrupt despotic regime owned by banks.

Not to mention the U.S. populace is deeply divided along many lines, besides being delusional and disconnected from reality.

The U.S. is the H.M.S. Titanic steaming confidently toward icebergs, and the EU a slow motion train wreck.

Mon, 03/03/2014 - 18:01 | 4503674 resurger
resurger's picture

The bitch got greedy. Wanted $450/TCM.. If she had accepted 250. Look what you have done EU n murika, I mean yulia.

 

Mon, 03/03/2014 - 18:04 | 4503687 highwaytoserfdom
highwaytoserfdom's picture

Ukraine should just set up a Cayman Island  account and push interest to FED's negative rate discount table.  Simple simon....   Do as I do  not as I say...

 Does this sound like a good deal?

  1.  
    1. Fiscal discipline (that is, not too much government spending).
    2. Redirection of public spending toward education, health, and infrastructure.
    3. Tax reform (that is, broadening the tax base and cutting tax rates).
    4. Market-determined interest rates.
    5. Competitive exchange rates.
    6. Trade liberalization (that is, eliminating quotas and tariffs).
    7. Openness to foreign direct investment.
    8. Privatization of state enterprises.
    9. Deregulation

IMF and NGO's are illegitimate.   Military industrial Complex, Exxon, Chevron, Russians  loving this..  Oligarchs flaunting....    Krugman we have guns contrary to decency.    Safety

Mon, 03/03/2014 - 18:05 | 4503692 Chupacabra-322
Chupacabra-322's picture

Depending on the sanction, some sanctions can be considered an act of war. Unlike Iraq, I think Russia will not just stand by and be sanctioned.

Mon, 03/03/2014 - 18:07 | 4503701 LawsofPhysics
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Of course not, they will simply trade with everybody else...

Mon, 03/03/2014 - 18:39 | 4503876 CrashisOptimistic
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Two things, LoP dood.

1) Ya China will wonder why they are hesitating.

2) More subtle, this is the end of Iranian sanctions.  Russia will conduit it to China and take a commission.

Mon, 03/03/2014 - 18:11 | 4503714 Dorelei
Dorelei's picture

Having worked for almost a year at Exxon Mobile for their fuel delivery departement in charge of Puglia/Calabria (damn the  mafia highjacking my trucks!!) i can tell you can bend reality to deliver the black gold by any means any fucking where !

Mon, 03/03/2014 - 18:12 | 4503716 jm
jm's picture

Doing nothing will ensure than Putin cuts his own neck.  We give IMF credits to Ukraine, it bails out russian banks. Solution: give Ukraine no money, let it default.  Russian currency collapses as a result, gas and oil export proceeds go in the toilet. Putin looks like the short-sighted fool he is.  Maybe if we are lucky a demoralized, bankrupted oligarchary arranges for a bullet to the Putin head.

A full invasion of Ukraine will only make the ruble collapse more severe and lead to even more oligarchy unrest.  They are as rich in Ukrainian assets as they are Russian.  His head will roll for sure.

Anyway, this whole capital infusion is likely what Putin is probably playing for:  a capital infusion to keep his banking system and ruined economy afloat.  These tranches will be so covenanted and conditional that little money will ever flow.  He will be ruined with or without a Ukraine "bailout".  Even a Ukraine in default is a step up from the how bad Russia is right now..

Game, set, match over for the so-called "chessmaster".   

Mon, 03/03/2014 - 18:26 | 4503794 walküre
walküre's picture

Brilliant and to the point.

Money talks, bullshit walks.

Mon, 03/03/2014 - 18:38 | 4503852 CrashisOptimistic
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Then both of you should walk.

There is no money.  It is printed at a whim.

Oil is not printed.  It is 8ish million bpd X 365 days per year X $115 Brent/barrel = hundreds of billions of dollars per year -- and maybe not for long because why should they send something of value and get paper in return.

Mon, 03/03/2014 - 19:14 | 4503904 Flakmeister
Flakmeister's picture

CIO, the issue is that Putin and the EU are tied at the hip, there are no alternate customers, he is captive to his pipelines...

And the EU gets only ~40% of their NG exports from Russia...

A Mexican standoff...

Moreover, a few of those oligarchs took it in the can today.... Russian market was off 10% not even counting the move in the rouble...

Mon, 03/03/2014 - 21:57 | 4504652 CrashisOptimistic
CrashisOptimistic's picture

Fman, the 40% number is shaky, because it includes England.

The farther west you go, the less the gas comes from Russia.

But Germany's does.  Czechs does.  Poland's does.  Slovenia's does.  Lots of small countries get it from Russia.

Natgas is about electric power, too, not just heat.  The French are a tad insulated from that, but the core reality is the Germans aren't and the East Europeans aren't.  Besides which England has apparently already said no sanctions.  So Putin can decide unilaterally what gets shipped where.

The Iran consequence is pretty big.  The west's sanctions on Iran just collapsed.  Russia has no reason to cooperate with that anymore.

 

Tue, 03/04/2014 - 01:25 | 4505335 Flakmeister
Flakmeister's picture

Iran if anything reduces Putins leverage, as capacity had been shut in because of sanctions (not a lot, mind you)...

Reports are that exports are up ~100,000 -200,000 bpd...

=======

Once the gas leaves Nordstream, the major pipeline, Putin has very little say if I am not mistaken.

Recall that the EU produces a lot of NG on thier own: Norway covers ~40% (10 Bcfpd) of Eurozone+UK imports (~23 Bcfpd) Nordstream is another 5 Bcfpd...

Stocks are high as european demand has been soft due to weather and the Russian pipelines have not been running at capacity...

To give you an idea of the importance to Russia, European gas exports are 3% of Russian GDP...

As you know with Nattie, it is hard to find good uptodate numbers in consistent units. this is from the BBC:

 

Russia is Europe's biggest supplier of natural gas, but the continent has been weaning itself off dependence on its neighbour for the last decade.

It now imports less than 30% of its natural gas from Russia, compared with 45% in 2003, according to European Union statistics.

(My 40% number above was out of date)

----

BTW. if Putin does shut the gas off, do you think the Chinese will ever trust him?

----

Finally, here is everything you always wanted to know about OECD NG, 2012 

http://www.iea.org/media/training/presentations/statisticsmarch/NaturalG...

Mon, 03/03/2014 - 21:33 | 4504550 walküre
walküre's picture

@CrashiO:

The US doesn't pay Canada $100 / barrel. We pay the Canucks $70ish is my understanding. Doubtful the EU is paying market price to Russia. But regardless, I get your point.

Reason why Russia needs our worthless paper in return is so they can feed their people and keep the lights on. It's not that simple to think they can feed 150 million because they happen to have oil and gas in the ground and pumping it. There's alot more involved and you know that.

Let's see where this goes. Putin is walking a very tight rope here. Like Flak says below, the drop of the ruble and the Moscow markets are hurting rich Russians aka oligarchs.

Mon, 03/03/2014 - 18:42 | 4503889 Phuk u
Phuk u's picture

Agreed allow Ukraine to default but Pideraz Putin will strike

before this will happen. If he does'nt Russians will look at Putin as a loser.

Mon, 03/03/2014 - 19:29 | 4504140 esum
esum's picture

Putin next move GAS AND OIL .... GOLD ONLY 

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