In the third quarter Ukraine is more profitable to buy gas from European traders than Gazprom, wrote on Thursday, August 25, on his page on Facebook chief commercial officer of Naftogaz Yuriy Vitrenko.
Now there are proposals in which the price of Ukraine’s border with European countries is below the price of “Gazprom” taking into account falling prices on spot platforms, said a spokesman of Naftogaz Alain Osmolovsky. “We buy gas at market prices that change daily,” she added, but details were not specified. According ЛІГА.net the price of gas for Ukraine on the border with the EU, can be $165 per 1 thousand cubic meters taking into account the costs of shipping.
Kiev until 2014 purchasing almost all imported gas from Russia, began to shift to supplies from Europe, buying gas at a fixed price, and on the basis of quotations on the spot. Russian gas Ukraine buys from November 25, 2015 due to disagreement on price and the need for the prepayment. But at the end of June predpravleniya “Gazprom” Alexey Miller said that in the third quarter, the Russian monopoly is ready to supply gas to Ukraine at $167,57 per 1 thousand cubic meters “Price is lower than in the gas trading platforms in Europe buying Russian gas is favorable to Ukraine”, — said he.
“The price of independence”
The Minister of energy of Ukraine Igor Nasalik Wednesday, August 24, stated that the purchase of gas from “Gazprom” would cost $45 per 1 thousand cu m cheaper than in Europe. “Yes, we pay more because we pay for transit through Ukraine, and across Europe and back, and today the price is $185 per 1 thousand cubic meters of gas. Under a direct contract with “Gazprom” the price would be $140 [per 1 thousand cubic meters],” said an official in the TV channel “112 Ukraine”. He added, “the price of independence from Russian gas”. Vitrenko in your Facebook denied the words of the Minister: “I also don’t understand the phrase “the price of independence” in this context.
A week later, the head of “Naftogaz” Andrey KOBOLEV has acknowledged that this price is more attractive than that offered by the Europeans. But he noticed that there was a downward trend in the cost of gas in European markets. He also demanded that “Gazprom” signed an Addendum to the contract that would have lifted the conditions “take or pay” (in the case of a shortage the buyer pays the fine), and changing the price formula — oil product instead of binding to go to the price of hubs, less transportation costs. But representatives of Gazprom retorted that the current contract does not require any additions for the resumption of Russian gas supplies sufficient to make a prepayment. In the end the parties again agreed.
At the end of last week, spot prices for gas in Europe dropped to the lowest in seven years, says the Director of East European Gas Analysis Michael Korchemkin. Price of gas at the TTF hub, the German fell to $128 per 1 thousand cubic meters, while in June—July of the quotes exceeded $165, he said. Thursday, August 25, gas on the TTF rose to $138 per 1 thousand. cube. m. however, even with the transport costs of European gas traders will cost Naftogaz cheaper than a long-term contract “Gazprom” — $163 per 1 thousand cubic meters. m, calculated the partner of consulting company RusEnergy Michael Krutikhin. To that proposed by Miller price also need to add transport costs (about $25 per 1 thousand cubic meters), and the total amount will be $192,57 per 1 thousand cubic meters, he says.
In the third quarter of 2016, Kiev plans to buy 3 billion cubic meters of gas to prepare for winter and to bring the level of fuel in storage to 14.5 billion cubic meters. m (now, according to the Association of European operators of underground gas storages, is about 12 billion cubic meters). Excluding transport costs, the purchase of this volume, “Gazprom” would cost Naftogaz $502,7 million, and the European traders (based on quotes August 25) — $489 million, $13.7 million cheaper, estimated Korchemkin. And given the fact that Russian gas more calories, the benefits could reach $30 million, the expert adds.
But spot prices are constantly changing and can significantly grow closer to the heating season, warns Korchemkin. The price of long-term contracts more stable and depends only on the dynamics of prices for oil and oil products, he enumerates.
“Gazprom” has lost the Ukrainian market due to the lack of flexibility in the negotiations, says Krutikhin: “Monopoly prefers to give discounts to Germany, but isn’t coming to Ukraine for political reasons.” But, preferring the conditions of European traders, Kiev still receives Russian gas, says Korchemkin: traders in fact supply the fuel of “Gazprom” on the reverse tunnel.
Directly Gazprom could sell gas to Ukraine more — without European intermediaries. According to Vitrenko of “Naftogaz” over the past two years, reducing purchases from Moscow, the Ukrainian company saved $450 million, from November 2015 — $300 million (estimate Krutikhin).
But with direct deliveries “Gazprom” could again face the problem of non-payment from Kiev, Korchemkin reminds. But this scheme (European intermediaries) allows the Russian monopolist to increase shipments to Europe, the expert concludes. By the end of 2016, “Gazprom” will increase exports to more than 170 billion cubic meters by 6.6% higher than a year earlier, said Monday Miller.