Wednesday, 8 January, 2025 / Edition 40

As the polar vortex hits much of North America this week, it reminds us of the importance of energy supply security. I hope Europe will be able to keep warm, as Russia’s deal to send gas to European countries via Ukraine has expired. Let’s take a closer look.

Shangyou Nie

Editor, Well Read

Russian Gas is No Longer Flowing into Europe via Ukraine

TAM99PH/ Shutterstock.com

On January 1, Ukraine let the contract which enabled Russian gas to reach Europe expire. Previously, the gas had moved in transit through Ukrainian territory, but Ukraine does not want Russia to continue to profit from gas as the war continues. European countries will lose about 5 percent of gas imports, affecting mostly Slovakia and Moldova.

The latest:

• Over the past few months, Ukraine has warned other E.U. countries that it did not intend to extend the contract.

• Russian gas exporter Gazprom said that its stopped gas flows via Ukraine, “due to the Ukrainian side’s repeated and explicit refusal to extend these agreements.”

• Ukraine would not allow Russia to “earn additional billions on our blood,” said Ukrainian President Volodymyr Zelenskyy, seeing the cut-off as another victory against Russia.

• The Ukraine pipeline is one of two pipelines remaining that supply Russian gas to Europe.

• The other pipeline is the TurkStream via the Black Sea through Turkey, which supplies about 5 percent of Europe’s gas imports.

• According to one estimate, Russia will lose about $6.5 billion in revenue per year from gas exports to Europe via Ukraine.

• Ukraine will also lose about $1 billion in transit fees.

Global reactions:

• The E.U. has encouraged its member countries to find alternative sources of gas so as to be less dependent on Russian imports.

• Slovakia and Hungary have been openly critical of Ukraine’s decision to stop gas transit.

• Slovakian Prime Minister Robert Fico challenged whether Ukraine had the “right to damage the economic national interests of an (EU) member state.” Slovakia is threatening to cut off electricity supplies to Ukraine in retaliation.

• Poland offered to supply electricity to Ukraine if Slovakia follows through with its threat.

• Hungarian Prime Minister Viktor Orbán has tried to find a solution to continue importing Russian gas via Ukraine’s pipeline system. For now, it will rely on getting Russian gas via Turkey.

• Austria said that it has secured other supplies. “We did our homework and were well prepared for this scenario,” said Leonore Gewessler, Austria’s Energy Minister.

• Moldova, which is not part of the E.U., issued a state of emergency in mid-December, anticipating the potential gas import's end.

• The E.U. said in a recent report, “The impact of the end of transit via Ukraine on the E.U.’s security of supply is limited in both volume and scope, affecting only a few countries”.

What’s next:

• The EU will rely on more LNG imports from the United States.

• Gas traders think future Russian gas exports to Europe could still be possible when the war ends.

• In the meantime, Europe’s other LNG supplier, Qatar, has threatened to stop supplying LNG to Europe if some E.U. countries enforce a new law that penalizes companies that do not meet carbon emissions standards.

Sponsored

University of Alberta MSc in Integrated Energy Geosciences

The University of Alberta offers a 1.5-year, course-based MSc in petroleum exploration and development, geothermal energy, geological carbon sequestration, and mineral resources in sedimentary basins. 

BP Delivers First Gas in Greater Tortue Ahmeyim LNG Project

LouieLea/ Shutterstock.com

BP announced that it has begun flowing gas from wells at the Great Tortue Ahmeyim (GTA) LNG project in offshore Mauritania and Senegal.

The latest:

• BP said in a press release that gas started flowing from wells at Phase 1 of the GTA LNG project to its floating production storage and offloading unit.

• Phase 1 of the GTA LNG project will be for floating LNG and produce 2.3 mtpa, with a full capacity of 2.7 mtpa. Some of the gas will be used to meet local energy needs.

• The timing of first LNG has not been announced, though officials from Mauritania and Senegal said, it will be “soon” after commissioning.

• According to the Mauritanian government, Phase 2 for GTA LNG will be a gravity-based structure with a capacity of 2.5–3 mtpa.

About the project:

• The GTA gas complex is located in 2,850 m of water depth, 120 km offshore from Mauritania and Senegal.

• Dallas-based Kosmos Energy made the initial deepwater gas discovery in 2015 in the maritime border area between Mauritania and Senegal.

• According to Kosmos, there is a potential of 50-100 Tcf of gas resources from the discovered gas fields.

• Gas will first flow to a FPSO located 40 km offshore, where condensate and impurities will be removed, before being transferred to the FLNG facility.

• The Gimi FLNG vessel is owned and operated by Golar LNG.

• The FPSO, constructed by Technip Energies in China, has capacity to process more than 500 million standard cubic feet of gas daily.

• BP is the operator and owns a 56-percent working interest in the GTA project, with partners Kosmos Energy (27 percent), Petrosen (10 percent), and SMH (7 percent).

• Kosmos' stock price jumped more than 10 percent upon the news of first gas delivery. Its market cap stands at $1.9 billion as of 6 January 2025.

What they’re saying:

• “This is a fantastic landmark for this important megaproject,” and “Africa’s significance in the global energy system is growing,” said Gordon Birrell, EVP of Production and Operations for BP.

• “Achieving first gas sets the stage for us to ramp up production and reach the ~90,000-boped production target we set two years ago,” said Andrew Inglis, CEO of Kosmos Energy.

Implications:

• African LNG supply is helping to fill a gap for Europe as it tries to become less dependent on Russian gas.

• Mauritania and Senegal will soon become the latest LNG exporting countries of the world, taking advantage of the increasing global demand for LNG.

👍 If you enjoyed this edition of Well Read, consider supporting AAPG's brand of newsletters by forwarding to a friend or colleague and signing up for our other newsletters here.

➡️ Was this newsletter forwarded to you? Sign up for Well Read here.

✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.