UKRAINE UPDATE: 13 AUGUST 2024: Zelensky confirms capture of swathe of Russian territory; 120,000 flee Kursk incursion

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Ukraine’s military had taken control of 28 towns and villages in Russia’s Kursk border region, prompting a sixth of its population to flee the incursion, the acting regional governor told President Vladimir Putin.

Ukraine’s anti-graft agencies said a deputy energy minister had been detained on suspicion of bribery, with an illegal scheme related to the transfer of coal mining equipment broken up.

Zelensky confirms capture of swathe of Russian territory

Ukrainian President Volodymyr Zelensky publicly confirmed for the first time that his forces had seized a swathe of Russian territory as his top commander said some 1,000 square kilometres had been taken.

Referring to the “operation in the Kursk region,” Zelensky commented in a Telegram statement after meeting top military officials on Monday. Since the action began a week ago, the Ukrainian leader hadn’t explicitly acknowledged the incursion into Russia.

Oleksandr Syrskyi, Zelenskiy’s commander-in-chief, said that the operation continued and the situation remained “under our control”, according to comments made in the Telegram video.

Russia evacuates 180,000 as Ukraine takes 28 towns

More than 120,000 people had left their homes and about 60,000 more were waiting to be evacuated, Alexey Smirnov told Putin and Russia’s top security officials during a televised meeting on Monday. Ukrainian forces had penetrated at least 12km into Russia and controlled a border area at least 40km wide, though there was “no clear understanding” of where their troops were, he said.

The frank assessment of the scale of the Ukrainian intervention prompted Putin to interrupt the governor, telling him to focus on “helping people” and leave the military to assess the battlefield situation. The broadcast ended shortly afterwards.

Putin said the Defence Ministry’s main task was to “drive out the enemy from our territories and, together with the Border Service, ensure reliable protection of the state border”.

He acknowledged fighting could spread further in Russia, telling the governor of the neighbouring Bryansk region that if things were calm there now “it doesn’t mean the situation will remain the same tomorrow”.

Ukraine would continue attacks to try to destabilise the political situation in the country, said Putin. The government in Kyiv was attempting to stop Russia’s offensive in eastern Ukraine and was “striving to improve its negotiating positions in the future”, he said.

Russia had sent reinforcements to try to quell Ukraine’s surprise cross-border attack, the first time since World War 2 that a foreign military had taken control of part of its territory. It’s the biggest assault within Russia since Putin ordered the February 2022 invasion of Ukraine which was supposed to end within days and is now well into its third year.

“The Russians have been severely embarrassed,” said Matthew Savill, military sciences director at the Royal United Services Institute in London. Still, “sustaining a force of any size in Russia, and defending against counter-attacks, will be hard, given the limited reserves available” to Ukraine.

Ukraine deputy energy minister detained in bribery probe

Ukraine’s anti-graft agencies said a deputy energy minister had been detained on suspicion of bribery, with an illegal scheme related to the transfer of coal mining equipment broken up.

Investigators from the National Anti-Corruption Bureau (Nabu) said on Monday they discovered that the deputy minister, who wasn’t identified, proposed the transfer of equipment to the directors of a state coal mining company in the east of Ukraine and a state coal mine in the west. The deputy minister asked for a $500,000 bribe in exchange, said Nabu in a post on Telegram. The official was caught when he was receiving one of the five $100,000 instalments, said Nabu.

Ukraine’s Cabinet later said that Deputy Energy Minister Oleksandr Kheilo had been dismissed from his post. There are five deputy energy ministers, according to the ministry’s website.

The Energy Ministry assisted the National Anti-Corruption Bureau and the Special Anti-Corruption Prosecutor in the investigation, it said in a statement on Telegram.

Russian-occupied nuclear power plant ruled safe after fire

The Russian-occupied Zaporizhzhia nuclear power plant in southern Ukraine reported normal radiation levels following a fire and explosions, according to the global nuclear watchdog.

Thick dark smoke was seen over one of the plant’s cooling towers, the Vienna-based International Atomic Energy Agency said in a statement on its website on Monday. Ukraine and Russia traded blame for the incident.

While there was no risk of elevated radiation levels in the area, any fire on the site posed a risk because it could spread to other parts and compromise safety, said the International Atomic Energy Agency (IAEA). It called for immediate access to the cooling tower to assess any damage.

“These reckless attacks endanger nuclear safety at the plant and increase the risk of a nuclear accident,” said IAEA Director-General Rafael Mariano Grossi. “They must stop now.”

Russia seized the Zaporizhzhia nuclear power plant, the largest in Europe, in March 2022, shortly after it launched the full-scale invasion of its neighbour. Since then, the plant has been disconnected from the Ukrainian power grid. The IAEA demanded that Russia return the plant to Ukraine, citing concerns over deteriorating safety.

The fire broke out on Sunday evening at the service water supply facility of the plant, said Energoatom, which manages Ukraine’s nuclear power stations, in a statement on Monday. As a result, one of the cooling towers, located about 1km from the power units, caught fire and some technological equipment was damaged, it said.

Zelensky said Russian troops started a fire on the grounds and called for the return of the facility to Kyiv’s control.

Russia, for its part, blamed the incident on a Ukrainian drone attack, according to a statement on the Telegram channel of the country’s mission to the IAEA.

Ukraine and Russia plan to keep gas flowing as fighting rages

Russia and Ukraine intend to keep pipeline gas flowing to Europe even as fighting continues near a key cross-border transit point for the fuel.

Both sides have no intention of halting flows via the Sudzha gas-intake station in Russia’s Kursk region, people with knowledge of the matter said, asking not to be identified due to the sensitivity of the information.

Ukraine’s biggest incursion into Russian territory since the Kremlin invaded its neighbour in 2022 has pushed European gas prices to the highest this year amid fears supplies will be disrupted. Yet both sides have a financial incentive to keep fuel flowing. For Kyiv, gas transit provides crucial funds for its war-torn economy — amounting to about $1-billion in 2021 — while Europe remains one of Russia’s largest customers for pipeline gas.

Ukraine is keen to be seen as a reliable partner to Europe in the hope the region’s traders will make more use of its vast gas storage facilities. And it has good reason to protect infrastructure since unused pipelines could become targets of military attacks or fall into disrepair, which would be costly to fix.

Yet any accidental damage to key infrastructure at the gas-intake station could halt supplies, one of the people said. The cross-border point has been under control of Ukrainian troops following the incursion, two people said.

“We intend to continue to provide gas transportation services within the framework of the agreement,” Ukraine’s Naftogaz said in a statement, referring to a gas transit deal that expires in December.

While most of Europe has sought alternatives to Russian pipeline gas since the invasion of Ukraine, nations such as Austria, Slovakia and Moldova continue to import supplies from Gazprom via Ukraine.

Europe’s gas traders rush to buy protection as supply fears rise

Traders rushed to snap up protection against surging European gas prices, signalling they expected more disruption to supplies with the heating season less than two months away.

Implied volatility linked to Dutch gas options — a measure of how expensive the underlying derivative contracts are — jumped in August, indicating fears of supply shortages. Options volume was up by 71% last week compared with a year earlier, according to data from Intercontinental Exchange.

The moves mark a notable change in a market where one of the dominant trades this year has been a bet against big swings. With several flash points emerging that could threaten gas supplies — related to both the Ukraine-Russia war and the continuing Middle East conflict — volatility is edging higher.

Traders have been closely watching Ukraine’s recent incursion into Russia’s Kursk region because a gas-transit point there is key to bringing Moscow’s remaining Europe-bound flows to market. While much of the continent has weaned itself off Russian piped gas since the 2022 invasion, a cut to supplies would still be a shock, pushing up prices.

The options wagers allow traders — currently filling up storage ahead of the heating season — to profit from an increase in prices. While Europe’s gas inventories are ample for the time of year following a relatively mild winter, stockpiling more could become more costly if flows to Europe are disrupted.

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Ukraine’s incursion into Russia has unsettled traders, who were expecting the fuel to keep flowing through Ukraine at least until the end of the year when a key transit deal expires. DM