Ukrainian gas demand climbed sharply in August, driven by strong demand from gas-intensive industrial consumers and the power sector.

Aggregate consumption jumped to 50.44mn m³/d from 41.98mn m³/d a year earlier, putting it at its highest for the month since it hit 62.9mn m³/d in 2013, before the conflict in eastern Ukraine drove a sharp deterioration in economic activity and gas demand.

Total unadjusted industrial production declined by 5.3pc in August compared with a year earlier, national statistics data show (see indexes table). But output varied by sector, with output from some gas-intensive sectors climbing sharply and entirely offsetting lower gas use from other sectors. Output from the gas-intensive chemical, pharmaceutical and coal mining sectors increased by 0.4pc, 14.1pc and 3pc on the year, respectively.

Still, output from some gas-intensive sectors fell, including from the metallurgical and finished metal product sectors.

About 60pc of consumers are connected to distribution networks, with the remainder connected directly to the national transmission network (see connections graph). While the proportion varies by months, about 63.7pc of aggregate consumption was tied to distribution networks in August 2019.

Assuming that the distribution networks' share of demand was unchanged in August from 68pc in June — the latest data available — deliveries to the distribution network would have climbed to 34.5mn m³/d from 26.8mn m³/d a year earlier. Deliveries made directly from the transmission network would have also risen slightly.

And assuming that the share of supply sent through the distribution network accounted for by industry, the power sector, households and state-supported organisations — such as schools — remained unchanged from June, the increase would have been largely driven by industrial demand, which would have climbed to 20.6mn m³/d from 17.6mn m³/d a year earlier (see August distribution sector breakdown graph). Demand from the power-sector rose even further, to 7.96mn m³/d from 3.87mn m³/d (see distribution breakdown table).

And overall industrial demand may have climbed even further, as the rise in total demand outpaced that of users connected to distribution networks by 760,000 m³/d. Users directly connected to Ukraine's transmission networks are predominantly large industrial enterprises, whose gas use may have also stepped up in August, even as industrial production slowed.

This article is reproduced at argusmedia.com