Ukraine might purchase gas from German company

Naftogaz of Ukraine (NAFTO) signed a framework agreement to buy gas from Germany’s RWE Supply & Trading, the former’s press service reported on Friday. The agreement, though, did not include obligations on size, price or timing of supplies.

Alexander Paraschiy: This type of arrangement was successfully pursued by Poland’s PGNiG (PGN PW), which is reported to have saved USD 40 mln in 4Q11 due to purchases of gas from Germany instead of Russia, via a virtual reverse flow mechanism. While theoretically this could be applied to Ukraine as well, at this stage we, however, treat Naftogaz’ agreement as no more than an attempt to boost its bargaining position in gas discount talks with Gazprom (GAZP RU).