Tuesday, November 25, 2014

Ukraine Energy situation ( November 25 , 2014 ) -Russia tightens screws on Ukraine by cutting off Russian coal ! Natural gas has gotten the focus , however coal is critically low - at the prest rate 2015 shaping up to be extremely problematic if power plant coal supplies are exhausted by the end of 2014 !

State Of Emergency In Ukraine As Russia Cuts Off Coal

Key snippet.....


In an interview with the television channel 112 Ukraine, Dmitry Marunich, a co-chairman of the Ukrainian Energy Strategies Fund, said Russia’s suspension of coal deliveries comes at the worst possible time because Kiev has “little chance to find other sources to substitute for it.”

Marunich said that Ukraine is already too busy contending with other problems involving Russia to devote the time and money to arranging imports from other countries. One such contract, he said, was signed with South Africa to help wean Ukraine from Russian coal, but South Africa cut off shipments earlier in November, citing political instability in Ukraine.
As a result, Marunich warned of power shortages and resulting rolling blackouts during the coming winter.
Making matters worse is the status of the gas Ukraine needs to import from Russia. Moscow shut off that supply in June because of a dispute over unpaid bills and pricing. In October, with the help of the European Union, Kiev and Moscow reached a tentative deal to restore gas shipments, but they haven’t resumed because Russia demanded that Ukraine pay for the gas in advance and Ukraine has yet to do so.
Ukraine has some gas in storage, but the amount it now holds would meet the country’s needs for only about three-and-a-half months.


Russia suspends coal supplies to Ukraine

Tuesday November 25, 2014 6:40AM ET 

Russia has suspended supplies of coal to Ukraine, the press service of the Ukrainian Energy and Coal Industry Ministry reported, citing Energy Minister Yuriy Prodan.

Russia coal

"According to the information obtained by the Ukrainian Energy and Coal Industry from Centrenergo and DTEK, coal supplies from Russia have been suspended," Prodan said.

Reports on November 24 said that the Russian side on Saturday stopped shipments of coal for Ukraine and that the supplies were not to be resumed in November.End of Article


Prodan confirmed suspension of coal supplies from Russia

24.11.2014 / 17:44 2 2545
Prodan confirmed suspension of coal supplies from Russia
Photo: Reuters
Minister of Energy and Coal Industry of Ukraine has confirmed the suspension of coal supplies from Russia in the interests of DTEK energy holding and Centerenergo, reported the press service of the Ministry of Energy and Coal Industry of Ukraine with reference to the minister's statement.
As Capital reported, earlier informed source said that Russia suspended supplies of coal of energy types to Ukraine.
After that, Spokesman of the Ministry of Energy and Coal Industry Olena Mischenko denied this information.

Itar Tass.....

Ukraine enters winter heating season without sufficient coal stocks - media

 November 23, 2:48 UTC+3
Stocks of anthracites and semi-anthracites, which are used at half of 14 major Ukrainian thermal power stations have dropped by one fourth making slightly more than one third of million tonnes
KIEV, November 23. /TASS/. Ukrainian thermal power industry enters winter heating season without required coal stocks which had dwindled by around 15% at thermal power stations by early November, newspaper ZN.UA said on Saturday citing experts.
In particular, stocks of anthracites and semi-anthracites, also called as energy coals, which are used at half of 14 major Ukrainian thermal power stations “have dropped by one fourth making slightly more than one third of million tonnes that are much lower than required amounts,” the edition said.
Ukrainian President Petro Poroshenko “was being talked into coal can be easily bought in the world,” the newspaper reported. But this was forgotten that not just coal, but anthracite, an extremely rare coal brand, was needed for Ukrainian thermal power stations, because its share in global coal reserves makes around one percent.
“Ukraine pinned some hopes on Vietnamese market which has abundant anthracite reserves,” the paper said, noting that “The country also had some hopes, because Ukrainian specialists are building two shafts at a Vietnamese coalmine. However, Vietnam did not have free coal resources. Moreover, Vietnam plans to import coal from Australia in the medium-term prospect and to reduce its coal export three or four times delivering it for domestic needs. Vietnamese coal export is already restricted by a high export duty.”
In coming winter Ukraine can actually pin hopes only on Australia among foreign countries producing anthracite, the paper said, noting that suppliers from the United States and Poland “almost do not have anthracite.”
In this connection, the newspaper noted Ukrainian major state-run electric power producer Centrenergo’s plans announced in mid-November that along with already supplied 250 thousand tonnes of South African coal the same amounts will be delivered before the end of the year and contracts were also concluded for delivery of 320 thousand tonnes of coal of “Ukrainian origin” and 509 thousand tonnes of Russian energy coal. The wording of “coal of Ukrainian origin” means coals from stocks in war-torn eastern Ukraine’s Lugansk region “with possible supplies via Russia,” the paper said.


Ukraine's Centrenergo in talks to buy US thermal coal

London (Platts)--18Nov2014/732 am EST/1232 GMT

Ukraine's second largest power generator Centrenergo said it held preliminary talks Monday with US-based company Recursion Ventures to discuss the buying US thermal coal for its power plants.

The company said talks focused on the basic specifications of the coal, forecast volumes, terms and conditions of supply and pricing.

"At the end of the meeting, the sides expressed hope for a fruitful mutually beneficial cooperation and speedy resolution of problems," the Centrenergo said.

Last week Centrenergo said it was continuing to experience a shortage of thermal coal for electricity production and heating purposes due to the conflict with pro-Russian rebels in eastern Ukraine, where most of the country's coal mines are located.

The company said it had concluded contracts for the supply of thermal coal for 2014 after the Ukraine government said it should take all necessary measures to diversify the sources of thermal coal supply.

Under these contracts, Centrenergo would receive 1.079 million mt of coal, of which 509,000 mt will come from Russia, 250,000 mt from South Africa and 320,000 mt will be domestic Ukrainian material, the company said.



Expert: outstanding political will is necessary to resolve energy crisis in Ukraine

18 november 2014
“Ukraine experiences a full-scale energy crisis, which combines 3 aspects: gas, coal, electrical energy industry”, announced the Head of Division of the Department for Research Works of the Analytical Center Alexander Golyashev during the roundtable in the INA “Rossiya segodnya” Media Center, where experts discussed energy security problems of Ukraine.
Coal is the main home energy resource of Ukraine, noted the expert. Up to the present crisis coal provided nearly 45% of national primary energy production and one third of consumption, and during recent years its role grew higher due to the curtailing of gas consumption. Coal’s share in electricity production exceeded 40%. “Usually nearly 80% of consumable coal was produced onsite”, recalled Mr. Golyashev. “Thermal coal was produced completely, nearly 40% of coking coal for the industry country had to import. However, in 2014 the situation changed: according to the State Statistics Committee of Ukraine, in August-September 2014 when compared to 2013 coal extraction reduced by 55-60%”.
Gas problems were obvious from the outset, while coal problems became the business of the day only in summer. Coal crisis may lead to a third problem – electric-power industry crisis. Coal-steam plants’ and heat power plants stable operation is at risk due to coal pits’ destruction in the east part of the country. In recent months Ukraine lost 12 million tons of coal because of military moves in the Donbas. Heat power plants’ yard stocks range from 1 to 2 million tons, according to different experts. Without coal supplies these yard stocks may be exhausted in 20 days and for successful passing through autumn-winter period it is necessary to double coal yard stocks, and in the current situation that is doubtful as ¾ of coal pits are onsite the Lugansk People’s Republic and the Donetsk People’s Republic. Meanwhile the Ukrainian Cabinet of Ministers monthly prolongs extreme measures in electric-power market and the Ministry of Energy and Coal Industry warned citizens about rolling blackouts. Last time such situation occurred in early 90s, the expert recalled.
In this situation Ukraine made a decision to solve the problem by import. A contract with a RSA company on 1 million tons was negotiated, but General Prosecutors’ Office of Ukraine started inspections of contract specifications and Steel Mont made a decision to cut the contract twice and withdraw from futher cooperation due to eventual reputational loss. “Import from Russia always was coking, but since summer home extraction fall Ukraine started to import thermal coal”, said Mr. Golyashev. “It appears that import will be prolonged up to spring, there is only a scope issue under study”.
Technically, putting aside political issues, there is an obvious and easy way to solve the problem – Kiev needs to cooperate with the Lugansk People’s Republic and the Donetsk People’s Republic and buy coal there, as coal pits infrastructure and logistics are integrated, and a joint freezing is illogical. However the infrastructure was partly destroyed. And there is also a problem with Russian logistics, as border crossing in Kharkov and Sumy regions is limited, so Ukraine has to make arrangements with Lugansk People’s Republic and Donetsk People’s Republic, so why not simply buy coal there. Sea communications are complicated by expensiveness and lack of necessary conditions, considers the expert.


Nov 12 (Reuters) - Ukraine will be forced to buy coal from Russia to get through the winter, a serious setback to the country's efforts to lessen energy dependence on its powerful neighbour, Ukrainian Energy Minister Yuri Prodan said on Wednesday.

Conflict between pro-Russian rebels and Ukrainian forces in Ukraine's industrial east has disrupted coal supplies to thermal power plants (TPP), which provide around 40 percent of the country's electricity, and has left reserves critically low ahead of the cold winter months.

"We have no other option but to turn to the Russian producers and try to buy coal there, but we put the country's energy security under severe threat," Prodan said at a government meeting.

Earlier this year the government signed a deal to import 1 million tonnes of coal from South Africa and has already received three deliveries. But the supplier this week discontinued shipments amid allegations within Ukrainian media of irregularities within the deal.

Prodan on Wednesday denied the allegations and said the price struck within the deal was at market levels.

But he said other foreign traders were likely to refuse to work with Ukraine, fearing problems with the implementation of future contracts.

"The situation is not simple, and there is a danger that we will not be able to get through the cold period. We are continuing to look for alternative routes for coal supplies, but all the other companies are very wary of us," Prodan added.



On 22 October, Prime Minister Arseniy Yatsenyuk said that by the end of this year Ukraine will be 4 million tons short of coal. The deficit stems from the fact that 88 of the 93 Ukrainian mines operating in Luhansk and Donetsk oblasts, which together account for 70% of domestic production, are located in areas controlled by the militants. As a result of the war, 69 mines in the Donbas have ceased activity, and several have been destroyed. Even those mines still operating are having problems making deliveries to Ukrainian power plants due to damaged railway lines. As a result, coal production in September fell by 51% compared to the same month last year, and Ukrainian power stations are starting to feel the lack of fuel more acutely. In September, electricity production fell by 13.7%. An even greater decrease in power is being prevented by stockpiles of coal at the power stations, but these are shrinking rapidly. At the beginning of October they amounted to 1.93 million tons, including 0.49 million tons of high-grade coal, while in the same period last year stocks amounted to 4.37 million tonnes.

•    Next to gas, coal is of key importance in the Ukrainian energy balance (35%) and in electricity production (45%). Ukraine is the fourth largest coal producer in Europe (after Russia, Germany and Poland), with 4% of global output; until now, however, all the fuel consumed in the Ukrainian power industry has come from domestic production. As a result of the conflict in the Donbas, Ukraine will be forced to import large quantities of coal, especially the high-grade coal consumed in thermal power plants. According to estimates by the Ministry of Energy and Coal Industry, during the autumn and winter in Ukraine the coal deficit may reduce electricity production by 30%.
•    Due to the growing coal deficit, Ukraine has increased electricity production in its nuclear power plants to the maximum possible, significantly reduced energy exports, and significantly reduced supplies to Crimea. However, these measures cannot compensate for the declining energy production in heating plants. Therefore, as there is no chance that supplies from mines in the Donbas will be resumed in the following months, the deficit in the Ukrainian coal power plants will be a minimum of 4 million tons by the end of this year and about 2.8 million tonnes per month in 2015.
•    In light of the fact that the heating season has already begun, Ukraine has little time to ensure the supply of high-grade coal from abroad, especially taking into account that – in contrast to other types of coal – it is not readily available on the market (Poland does not export the coal which Ukraine needs most). It is expected that due to the lack of coal in the coming weeks, some of the Ukrainian heating plants will be forced to reduce production. In August Kiev signed a contract for the supply of 1 million tons of coal from South Africa, but the first delivery (80,000 tons) will only be made at the end of October. Another important problem is the price of the imported coal, which is about a third higher than that of domestic coal, which means additional expenses of approximately $200 million per month. As a result, these problems with coal, combined with a lack of Russian gas deliveries since 16 June, have aggravated the increasingly difficult energy situation in Ukraine.

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