Russia resumes gas supplies to Ukraine after the break

Russia resumes gas supplies to Ukraine after the break

The agreement with the Ukrainian “Naftogaz” on prepayment for Russian gas deliveries in October were achieved on Friday, said the head of “Gazprom” Alexey Miller.

MOSCOW, 12 Oct. “Gazprom” on Monday, October 12, may resume gas supplies to Ukraine after a three-month break; Naftogaz on Friday gave Russian companies a request for delivery in October of two billion cubic meters of gas and have transferred a prepayment.

As told journalists the head of “Gazprom” Alexey Miller, on Friday, 9 October, agreements were reached with the NJSC “Naftogaz of Ukraine” advance payment for Russian gas deliveries in October. “Gazprom” promised to resume supplies after receiving payment from 10.00 GMT on 12 October. The Ukrainian side has sent Gazprom a request for the supply of 2 billion cubic meters of gas in October, said Miller. In a press-service of “Naftogaz” confirmed these arrangements, and the transfer payment.

In January-June 2015 procurement of Russian gas to Ukraine amounted to 3.7 billion cubic meters. In July, August and September “Naftogaz” did not implement the purchase of Russian gas, because it is not satisfied with the price, with the discount of $ 40 had to be 247,17 dollars per thousand cubic meters. In this period the Ukrainian company treated the purchase of gas from Europe in reverse.

All Protocol

Currently “Gazprom” and “Naftogaz” are under trial in the Stockholm Arbitration court regarding some points a long-term contract for Russian gas supply to Ukraine, which expires in 2019. In this regard, the parties act on the basis of additional agreements to the contract.

In 2014 the gas supplies from Russia to Ukraine were halted from mid-June because of billions of dollars of debt Kiev. The situation was resolved only thanks to the signing of the so-called winter gas package between Russia, Ukraine and the EC. As a result, the supply of Russian gas to Ukraine last year only resumed in early December.

In just a period of the first winter package (November 2014 — March 2015) Ukraine has purchased 2,675 billion cubic meters of Russian gas. According to calculations, Naftogaz can pay Gazprom for the gas volume 905,499 million dollars.

In the second quarter of 2015 Ukraine bought Russian gas at the price 247,17 dollars per thousand cubic meters, and in the third, despite similar proposed price abstained.

Package with intrigue

In 2015, preparation for the purchase of Russian gas to Ukraine in winter were held with some oddities. For example, Ukraine had long decided to begin implementation of the winter gas package 2015-2016, and Russia still did not give an exact contract price for gas for Ukraine in the fourth quarter of 2015, but before her there was nothing to do it.

So, on September 25, in Brussels, energy Minister Alexander Novak, Vice-President of the EC Maros Sefcovic, and Minister of energy of Ukraine Volodymyr Demchyshyn has initialed a tripartite Protocol on gas supplies to Ukraine and its transit in the coming winter. Demchyshyn explained the initialing of the document what it must show to the lawyers.

In turn, Novak said that the Russian Federation all the necessary documents have been signed, “the ball is on the Ukrainian side,” and it may start purchases of gas at any convenient time. Later the Russian Minister told that Ukraine had proposed to give the document the status of the intergovernmental agreement, but it would take several months.

It was also proposed to make a tripartite Protocol on the meeting of leaders of channel four on 2 October in Paris, but according to its results, news on gas has not arrived. 7 October Demchyshyn said that Kyiv will begin purchasing gas from Russia for its injection into underground storage facilities before the signing of the initialled Protocol. The Ukrainian Minister for some reason thought that Novak at the time of initialling of the Protocol “does not have authorization from the government of the Russian Federation and therefore all history (of signature of the Protocol — ed.) so long”.

The essence of the agreements reached in Brussels, that Ukraine is obliged to purchase from Russia to 2 billion cubic meters of gas for injection into their UGS. Funding for these supplies will be provided at the expense of credit of 500 million dollars raised by Ukraine with the assistance of the EC.

In turn, Russia will give Ukraine a discount to the contract price of gas in the amount of about $ 20 per thousand cubic meters. While the exact figure is contractos prices for Ukraine in the IV quarter of 2015 so still not announced, indicated only the range of 248-252 dollars per thousand cubic meters. According to the decree of the RF government, the price for Ukraine will be at the level of neighboring Ukraine, such as Poland.

In the first quarter of 2016, the price of Russian gas for Ukraine could be lower than in the fourth quarter of 2015, said earlier Miller.

General Frost

In winter gas package 2015-2016 agreed purchase “Naftogaz” from “Gazprom” only two billion cubic meters of gas on a credit of 500 million dollars attracted using the EC. However, the head of “Gazprom” Alexei Miller warned Ukraine that abnormally cold winter is coming, occurring once a decade, and “Naftogaz” will need about 5-7 billion cubic meters of gas.

According to Miller, the bulk of the demand for Russian gas will be in the first quarter of 2016, and here the main issue remains the search for funds to purchase “blue fuel”.

Prime Minister of Ukraine Arseniy Yatsenyuk said earlier that Kiev until the end of the year in total is required for the purchase of gas and its pumping into underground storage facilities $ 1.3 billion, of which $ 500 million already on account of “Naftogaz”, Ukraine 300 million from the EBRD expects that another 500 million dollars from the WB.

The Minister of energy of Ukraine Volodymyr demchyshyn said that Ukraine definitely will buy from Gazprom for winter gas at 500 million USD, discounted price will amount to about 2.2 billion cubic meters under winter package, and further, the volume of purchases of Russian gas will depend on the need and capabilities of the country.