Russian War Against Ukraine: Energy Dimension (DiXi Group alert) – February 17 | DiXi Group
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Russian War Against Ukraine: Energy Dimension (daily updating DiXi Group alert)

February 17

Summary of the week

— On February 16, Russia launched another massive missile attack on facilities in the fuel and energy sector. Oil refineries in the Poltava region (Kremenchuk Refinery), Lviv region (Drohobych Refinery), as well as oil containers in the Kirovohrad region were affected. In addition, infrastructure facilities in the Kharkiv region were damaged, 6 employees of the local DSO were injured.

According to Prime Minister Denys Shmyhal, Russia’s massive attacks damaged almost two dozen power units. Taking into account the occupation, Ukraine lost 44% of its nuclear generation, 75% of thermal power plants and 33% of cogeneration units; every second substation of Ukrenergo was attacked.

— The uncontrolled discharge at the Kakhovka HPP by the occupiers leads to a rapid drop of water levels in the Kakhovka Reservoir. 70% of the settlements that receive water from the Dnipro River may be left without access to drinking water. It also threatens the safe operation of the temporarily occupied Zaporizhzhia NPP. According to the President of Energoatom Petro Kotin, the water level was at 13.8 m, while the normal level (necessary for feeding the turbine capacitors and safety systems of the ZNPP) is 16 m. Currently the ZNPP cooling pond has sufficient water level, but if the situation gets worse it will become a big problem.

The State Nuclear Regulatory Inspectorate has banned the operation of the Zaporizhzhia NPP units 3, 4, 5, 6 at energy levels of capacity. The decision was made due to the fact that the ZNPP industrial site is subject to periodic shelling, the overhead communication lines with the power system of Ukraine have been damaged, and the operator (Energoatom) does not have adequate opportunities to supply goods and materials.

— According to Ukrenergo, there is no capacity deficit in the power system during the entire working week and it is not forecasted. All types of power plants are in operation, production covers the demand. As a result of such stabilization, the imports of electricity from Slovakia and Moldova are insignificant. At the same time, ENTSO-E made a decision to increase the level of permitted transmission capacity for the imports of electricity to Ukraine to 700 MW (all hours).

— Due to the absence of deficit, consumption limits were not applied in the regions. Actual load measurements were carried out on February 13 in the Vinnytsia, Zakarpattia, Kirovohrad and Chernihiv regions, on February 14 – in the Luhansk, Poltava, Rivne and Cherkasy regions, on February 15 – in the Zhytomyr and Sumy regions, on February 16 – in the Dnipropetrovsk region, on February 17 – in the city of Kyiv and the Chernivtsi region. 

Ukraine insists on increasing sanctions pressure on Russia. According to the President Volodymyr Zelenskyi, the authorities are doing everything possible to make sanctions against the Russian nuclear industry part of global sanctions. According to the Prime Minister Denys Shmyhal, the response to nuclear blackmail at the Zaporizhzhia NPP and terrorism at the Kakhovka Reservoir should be the strengthening of sanctions, in particular on the Russian nuclear industry. The Ministry of Finance considers that excluding Russia from the FATF and putting it on the “black list” will significantly increase the cost of doing business with Russia and deprive Putin of ability to finance the war. In the meantime, President Zelenskyi put into effect the National Security and Defense Council decision regarding sanctions against 200 individuals.

The government announced a program of restoration and protection of energy facilities, as well as decentralization of the power system. The Cabinet of Ministers approved the Procedure for using the Fund for Liquidation of Armed Aggression Consequences and set procedures for the sale at open tenders of confiscated Russian assets and property, which are sources of revenue for the Fund. The Ministry of Energy, together with the State Agency for Restoration and Infrastructure Development, to work out the issue of financing the systemic recovery of power generation, where possible. According to the National Bank estimates, more than 400 critical infrastructure facilities need to be restored after missile attacks and to increase resilience to future attacks.

The compensation payment mechanism for damaged property should soon be operational. The Ministry of Infrastructure reported on an agreement reached with the UN agencies to attract 50 million USD, and the State Register of Destroyed Property has been launched. Three directions of compensation are also defined: for current repairs, for capital repairs, and for the complete reconstruction of destroyed housing. According to the government, Ukrainians submitted more than 325,000 reports about the destruction or damage to housing as a result of Russian aggression through the Diia application.

The government approved a list of 26 mineral deposits of strategic importance for national economy and defense that will be offered through tenders for the conclusion of production sharing agreements. The list features deposits of vanadium, lithium, titanium, uranium ores and potassium salt. The list is not exhaustive and will be reviewed annually.

The Cabinet of Ministers submitted to the Verkhovna Rada a draft law on the creation of minimum stocks of crude oil and petroleum products. According to the Ministry of Energy, the draft was developed to implement the Directive 2009/119/EU. The document sets procedure for calculation, formation, storage, release, and renewal of minimum stocks, as well as relevant reporting. Also, it contains a general definition of crisis in the field of oil and petroleum products and defines sequence of actions in the emergency, including release of the stocks. Creation of an operator with coordinating functions is envisaged, while the stockholding obligation is set on market players.

Ukraine is expanding and diversifying fuel imports. As experts reported, in January 2023, the volume of motor petroleum imports to Ukraine exceeded 200,000 tons; almost a third was shipped from Romania. Also, according to the media, at the beginning of February, 100,000 tons of diesel fuel produced in the U.S. arrived in Ukraine. This was the first ever case in history that American oil products were imported.

Ukraine declares its readiness to achieve “historic results” through “green” energy transformation. At a press conference with the Prime Minister of Sweden Ulf Kristersson, the President Volodymyr Zelenskyi said Ukraine seeks support of Swedish partners in creating a network of modern waste processing plants. The government proposed and submitted to the Verkhovna Rada a package of draft laws on introduction of net billing for RES installation of consumers and of the register for issuance, use and termination of guarantees of origin for electricity from RES. At the same time, the NEURC plans to check the financial indicators of Ukrenergo in order to determine the amount of current debt to RES producers.

The government has redistributed powers in the fields of renewable energy sources and energy efficiency. In particular, the Ministry of Communities, Territories, and Infrastructure Development is authorized with formation and implementation of public policy in the field of effective use of fuel and energy resources, liquid and solid alternative fuels, and energy efficiency. The Ministry of Energy is left with formation and implementation of public policy in the field of RES and gaseous alternative fuels.

The National of Energy and Utilities Regulatory Commission (NEURC) urged the fastest possible implementation of the REMIT due to the need to prevent abuse in wholesale energy markets. As reported, the Regulator found a discriminatory clause in bilateral contracts of one of the market players.

The Regulator has strengthened the requirements to inform consumers about disconnections. The NEURC approved the requirement for DSOs on direct informing of customers about power supply interruptions no later than 1 hour before the restriction, and in the event of an emergency – immediately after the actual application – using personal accounts of consumers and/or messengers, emails. According to the NEURC Chair Kostyantyn Uschapovskyi, the Regulator will continue inspecting DSOs and fine them for inefficient performance of duties. According to him, most of the complaints are related to the fact that consumers do not have access to call centers, and there is no information on websites about the clear start and end times of outages.

— In just two weeks, a million Ukrainians took advantage of the program to exchange incandescent lamps for energy-saving LED lamps. Lamps are most actively exchanged in the Kyiv (585,000), Lviv (420,000), and Dnipropetrovsk (410,000) regions. By the end of the month, Ukrposhta expects that the company’s mobile offices will take LED lamps to the most remote villages, so that all Ukrainians can benefit from the program.

Investigations of high-profile criminal cases are ongoing. In particular, the Economic Security Bureau exposed a scheme for evading over 244 million UAH in customs payments during the transit of oil products through pipelines in 2020-2022. The National Anti-Corruption Bureau and the Specialized Anti-Corruption Prosecutor’s Office completed a pre-trial investigation on one of the suspects in the so-called “gas case” – the former head of the State Fiscal Service department. MP of the banned Opposition Platform – For Life party Yurii Boyko may own a number of Ukrainian energy companies via a firm in the Cayman Islands – Bihus.Info investigation.

Anthony Marino, who held the positions of executive director, president and CEO of Vermilion Energy, and is currently the President and CEO of Tenaz Energy, has been elected as the chairman of Supervisory Board at Naftogaz. Also, bondholders did not support Naftogaz’s latest proposal to restructure payments on Eurobonds maturing in 2022 and 2026, on which the company defaulted. A group of creditors proposed its plan which considers Naftogaz’s current financial conditions, as well as its “legitimate concerns regarding the need to support the Ukrainian economy and its critical infrastructure”.


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National website of Extractive Industries Transparensy Initiative in Ukraine

Information and analitical website “Ukrainian Energy” is unique   platform to inform