Ukraine prepares for biomethane exports to Europe

LONDON (ICIS)–Three companies have reached an agreement to sell the first volumes of biomethane from Ukraine to Europe, according to RGC, Ukraine’s largest gas distribution company said in a statement on 30 September.

Ukraine-based RGC and Gals Agro, along with Dutch trader STX, agreed to facilitate the sale of biomethane via virtual trading.

This means that the first biomethane volumes would be injected by RGC into the Ukrainian gas grid and sold to the virtual trading point (VTP).

The same amount of gas would be netted out in Europe, where the companies are also involved in trading biomethane.

Importantly, buyers of Ukrainian biomethane will receive a document certifying its Ukrainian origin.

“We develop our project step-by-step and currently are entering into its final stage, [as in] planning the actual sale of biomethane to the EU. It will allow us to work in a sustained way and plan output expansion”, said Serhii Kravchuk, CEO, Gals Agro, Ukraine’s first biomethane producer.

At the same time, the memorandum of understanding signed by the three companies establishes the framework for other biomethane producers to sell the green gas to Europe. This is the first arrangement between all parties, including the producer, buyer, and the infrastructure side.

“We currently sell approximately 10% of biomethane in Europe and plan to expand. We were the first to sell biomethane originating from Norway, Sweden and Denmark. Now it’s time for biomethane from Ukraine,” said Bart Wesselink, chief financial and risk officer at STX Commodities B.V.

RGC has already started works to connect Gals Agro production facilities to gas distribution networks in the Chernihiv region. This company will be the first biomethane plant in Ukraine to be connected to gas distribution networks and sell biomethane to Europe.

Aside from the project in the northern Chernihiv regional, RGC is also in the process of connecting the second biomethane plant in the west-central Vinnytsia region to gas distribution networks.

RGC told ICIS earlier in August , it had received 30 applications to connect biomethane plants.

The plant in the northern Chernihiv region had already been producing biogas and was expecting special equipment from European partners to convert it to biomethane.

The plant could feed three million cubic metres of biomethane to the grid before the end of the year. Other companies that are expected to be connected to the grid could produce higher volumes, close to 10mcm/year, he added.

Thanks to its vast agricultural landmass, Ukraine has some of the strongest potential for biomethane production in Europe. It has been tipped to produce as much as 8bcm/year of biomethane by 2050, or nearly a third of its pre-war gas demand.