Russia awaits proposals from Ukraine on gas price
13 June 2016
The Ukrainian and Russian state natural gas monopolies are in contact to resume gas supplies to Ukraine, Russian Energy Minister Alexander Novak told the RIA Novosti news agency on June 12. “Everything will depend on what will be the proposals from our Ukrainian colleagues,” he commented on the resumption of gas supplies. The CEO of the Ukrainian gas monopoly Naftogaz also stated on June 7 that negotiations are being held.
On June 10, Naftogaz top manager Yuriy Vitrenko commented that imports of Russian gas make no economic sense currently, as Russian gas is priced at USD 182-183/tcm now (adjusted for its calorific value), while in Europe the price for July is below USD 173/tcm now. Ukraine has not bought gas from Russia since November 2015.
Alexander Paraschiy: It is very likely that the price of Russian natural gas for Ukraine will fall in 3Q16 and 4Q16 (the price is calculated for each quarter as a function of oil prices with some lag). If European prices won’t fall, it might become efficient for Ukraine to restart purchases of gas from Russia in 2H16, even if Ukraine gets no discount for that gas.
In 5M16, Ukraine imported just 3.0 bcm of gas (from all of the EU), which is a 66% decline yoy. It will have to import about 10-12 bcm in full-year 2016, meaning most of the annual purchases should happen in 2H16. Should Russian gas be cheaper this period, Ukraine could boost its gas imports from Russia this year, as compared to last year (6.1 bcm).
