Ukraine Latest: Nuclear Plant ‘Precarious’; Naftogaz Vs. Gazprom

·6 min read

(Bloomberg) -- The UN’s nuclear agency ramped up its warning about Ukraine’s Zaporizhizhia nuclear power plant, saying the facility may soon lose power and shut down its last remaining operating reactor after sustained shelling in the area. “This is an unsustainable situation and is becoming increasingly precarious,” the agency’s chief said.

Ukrainian President Volodymyr Zelenskiy said the nation’s army has recaptured more than a thousand square kilometers (386 square miles) of territory since Sept. 1, including dozens of settlements.

The World Bank and the European Commission estimated that reconstruction of Ukraine will cost at least $349 billion, based on damage inflict by early June, and the figure is expected to grow as the war goes on.

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Key Developments

  • US Treasury Releases Guidance on Russian Oil-Price Cap Plan

  • US Sees Economic Reasons for Russia to Comply With Oil-Price Cap

  • Ukraine Military Breakthrough in North Threatens Russian Grip

  • Russian-Occupied Reactor at Increased Safety Risk, UN Warns

  • Russia Current-Account Surplus at Record Amid Signs Growth Slows

On the Ground

Russia continued to shell the city of Kharkiv on Thursday night, local authorities said. Ukrainian forces are conducting a successful counteroffensive in the direction of Kharkiv, advancing almost 50 kilometers in three days, the Ukrainian General Staff reported. Ukrainian forces will likely capture Kupyansk in the next 72 hours, severely degrading but not completely severing Russian ground lines of communication to Izyum, the Institute for the Study of War said. Ukraine is starting military drills along its frontier with Belarus as a response to similar war games in the neighboring country, Ukraine’s Interior Ministry said on its website.

(All times CET)

US Releases Guidance on Russian Oil-Price Cap Plan (12:50 a.m.)

The US Treasury on Friday issued rough compliance guidelines for its proposed cap on the price of Russian oil, shortly after officials said Russia would have an economic incentive to participate.

The guidance, issued by the Treasury’s Office of Foreign Assets Control, tasks private companies with enforcing the cap by seeking certification that Russian oil is sold at or below a price set by the US along with other Group of Seven members. The guidance is aimed at the insurance companies and financial firms that facilitate the international oil trade.

The cap is meant to be in place by the Dec. 5 for crude oil, and Feb. 5 for petroleum products, in line with the implementation of the European Union’s ban on services associated with seaborne oil and refined products.

Ukraine Files Arbitration Case Against Gazprom (4:56 p.m.)

Ukraine’s state-run Naftogaz filed an arbitration case against Russia’s Gazprom PJSC for not paying for natural gas transit on time and in full, according to an emailed statement.

Naftogaz demanded Gazprom pay for transiting gas via Ukrainian territory as its contract includes a pump-or-pay clause -- meaning the Russian firm must pay the minimum gas-transit fee even if it doesn’t move the contracted volumes. Russia cut its gas transit via Ukraine this year.

A hearing will be held in Zurich, according to statement. Gazprom didn’t immediately respond to a request for a comment sent by Bloomberg News.

Nuclear Plant Situation ‘Increasingly Precarious,’ UN Agency Says (4:30 p.m.)

Operators at a Russian-occupied nuclear reactor in southeast Ukraine may soon have to draw on their last line of defense in order to prevent a nuclear accident, according to the direst warning yet issued by International Atomic Energy Agency monitors.

Continued attacks around the Zaporizhzhia nuclear power plant have cut power cables and rendered layers of safety-backup systems ineffective. Now, power systems in the nearby city of Enerhodar have been destroyed by shelling, IAEA chief Rafael Mariano Grossi said in a lengthy statement.

The IAEA called the situation “increasingly precarious.”

Poland May Buy Ukrainian Electricity (3:22 p.m.)

Poland may buy an unspecified amount of electricity from the Khmelnytskyi nuclear power plant in western Ukraine soon, Prime Minister Mateusz Morawiecki said at a joint press conference in Kyiv with Ukraine President Volodymyr Zelenskiy.

Imports from Ukraine could help the European Union’s largest eastern economy weather this winter as the coal-dependent country faces limited supplies following the embargo on Russia. Ukraine synchronized its grid with the EU earlier this year.

Kyiv’s Northern Breakthrough Threatens Russian Grip (2 p.m.)

A Ukrainian counteroffensive appears to be progressing in the north, but less so in the southern Kherson region that has attracted greater attention and Russian reinforcements.

Ukrainian officials and Russian military bloggers alike on Thursday described a counteroffensive in the north that has surprised in its speed, the first time since the war began that Ukrainian forces have been able to push past Russian defenses on a more than tactical level.

Read more: Ukraine Army’s Breakthrough in North Threatens Russian Grip

Inflation in Ukraine Tops 23% as Prices Surge for Seventh Month (1:55 p.m.)

Ukraine’s inflation rate accelerated for a seventh month as the nation grappled with Russia’s invasion, which has devastated the economy and hampered logistics.

Consumer prices rose 23.8% in August from the previous year, driven by staples such as eggs and sugar, data published on Friday showed.

Ukraine May Need $349 Billion to Recover from War Damage (1:30 p.m.)

The World Bank and the European Commission estimated that Ukraine’s reconstruction will cost at least $349 billion, according to an assessment that covered damage inflicted between Feb. 24 and June 1. The figure will only increase as the war, now in its seventh month, grinds on, the World Bank said.

The first stage will require $17 billion, of which $3.4 billion is needed already this year, Prime Minister Denys Shmyhal said. Ukraine’s government has to balance recovery projects and immediate needs, and the World Bank’s assessment will help the cabinet to prioritize.

Ukraine will need $105 billion over three years to restore education and health systems and heating infrastructure ahead of the winter season and to remove ruins and explosives, the World Bank estimated.

Ukraine Starts Drills to Mirror Belarus War Games (12:02 p.m.)

Ukraine began military drills along its frontier with Belarus as a reaction to similar war games in the neighboring country’s territory.

Ukraine’s National Guard, border troops and police in the country’s northern regions are training to defend the border, Interior Ministry said on its website.

Belarusian troops have begun massive drills in areas bordering Ukraine and Poland near Brest, simulating “liberation” of its territory captured by a hypothetical enemy. The drills, set to last Sept. 8-14, involve paratroopers, tanks, and rocket artillery.

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