Russia to consider gas discount for Ukraine shortly – energy minister

The Russian government will consider a possible discount for natural gas which is supplied to Ukraine, energy minister Aleksandr Novak told journalists on Mar. 30. According to Novak, the government has received letters with requests for a discount from Ukraine’s gas monopoly Naftogaz and the European Commission on Mar. 27, as reported by Interfax news agency.

Earlier the same day, Gazprom CEO Alexey Miller told a Russian TV channel that the Russian gas monopoly had filed its own request to the Russian government requesting a discount for natural gas to Ukraine, according to Interfax report.

As was agreed on a March 20 meeting in Brussels, the Russian government will consider abolishing export duty for gas that is supplied to Ukraine, on a quarterly basis. This would allow Ukraine to get Russian gas by USD 100/tcm cheaper than is provisioned for in the 10-year contract signed in 2009. The USD 100/tcm discount for Ukraine began in 2010 and was terminated by the Russian side in April 2014. Following a series of gas talks with the EU Commission representatives acting as mediators, interim agreement was signed in late Octoberto renew the discount for November 2014 – March 2015.

Alexander Paraschiy: Such an eagerness from everyone, including Gazprom, to get permission for a gas discount to Ukraine, should mean that today, when the old interim contract terminates, the Russian government will permit an extension of a USD 100/tcm discount for the next quarter. If this is so, Ukraine will be able to buy Russian gas at about USD 250/tcm in 2Q15. Such an import price, as well as an increased retail price for natural gas for households should allow Ukrainian gas monopoly Naftogaz to eliminate its cash deficit in the next quarter.