Ukraine's gas grid operator to suspend Russian gas flows via Sokhranivka

Ukraine's state-owned gas grid operator GTSOU said May 10 it had declared force majeure on the transit of Russian gas entering the Ukrainian system at Sokhranivka and would not accept gas at the entry point from May 11.

The force majeure declaration, the first of its kind since the Russian invasion of Ukraine on Feb. 24, sent European gas prices sharply higher.

As of 1430 GMT, the TTF front-month price had jumped 8% to above Eur100/MWh ($106/MWh), according to ICE data, up from Eur93/MWh before the announcement.

According to S&P Global Commodity Insights data, the contract was last assessed by Platts at Eur93.18/MWh on May 9.

In a statement, GTSOU said it would temporarily transfer capacity to the Sudzha entry point in order to maintain Russian gas transit to Europe.

Ukraine has repeatedly said that disruption to operations at the Ukrainian compressor station at Novopskov -- in an area of eastern Ukraine occupied by Russian troops -- could impact Russian gas transit volumes to Europe.

"Currently, GTSOU cannot carry out operational and technological control over the Novopskov compressor station," it said.

GTSOU said that from 7 am local time on May 11, gas would not be accepted into Ukraine's gas grid at Sokhranivka.

"In order to fulfill the transit obligations to European partners in full and in accordance with the terms of the agreement, it is possible to temporarily transfer unavailable capacity from Sokhranivka to the physical point of Sudzha in the territory controlled by Ukraine," it said.

One third of volumes

Almost a third of Russia's Ukrainian gas transit passes through the Novopskov compressor station on the Soyuz pipeline, which enters Ukraine at the Sokhranivka entry point on the border with Russia.

GTSOU said up to 32.6 million cu m/d is transited via the compressor.

Explaining the rationale for the force majeure declaration, GTSOU said the Russian occupation of the compressor station had led to changes in the operations, including unauthorized withdrawal of gas from the transit stream.

That, it said, "endangered the stability and safety of the entire Ukrainian gas transportation system."

"These actions under the current transit contract are force majeure circumstances that make it impossible to fulfill obligations at Sokhranivka as well as the border compressor station Novopskov that are not currently controlled by GTSOU." it said.

"The company repeatedly informed Gazprom about threats of transit due to the actions of the Russian-controlled occupation forces and demanded an end to interference in the operation of the facilities, but these appeals were ignored."

Total Russian deliveries via Ukraine in March were as high as 110 million cu m/d, in line with Gazprom's contractual obligations under its five-year transit deal with Ukraine signed in December 2019, though transit volumes dipped in April.

Under those transit arrangements, Gazprom agreed to transit 65 Bcm of gas via Ukraine in 2020 and 40 Bcm/year in the period 2021-24, well down on a recent transit peak of 94 Bcm in 2017.

In 2021, Gazprom delivered 41.6 Bcm of gas via Ukraine, having topped up its contractual obligations with some shorter-term bookings.