WEDNESDAY, JULY 18, 2018
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Russia to keep a lid on natural gas price
Journal Staff Report

KIEV, Sept. 27 - Russia agreed Wednesday to keep prices of natural gas it supplies to Ukraine unchanged at $95 per 1,000 cu m through the rest of the year.

The agreement, following two months of talks, ends the uncertainty caused by Russian suggestions that Ukraine pay at least $135 per 1,000 cu m starting October due to a recent hike in Turkmen gas prices.

At the same time, Russia reduced the amount of gas that it will supply to Ukraine during the next three years, suggesting that Ukraine will not be able to resume re-exports of gas to Europe.

The deal leaves RosUkrEnergo, a controversial Swiss-based gas trader controlled by Russia’s Gazprom, as the only supplier of gas to Ukraine during the next three years.

“In order to maintain acceptable prices, all gas supplies will continue to be handled by RosUkrEnergo,” Ukrainian energy and fuel minister Yuriy Boyko said in a statement after talks with Gazprom in Moscow.

Boyko signed the deal with Alexei Miller, the chairman of Russian gas monopoly Gazprom, follows last week’s talks between Ukrainian Prime Minister Viktor Yanukovych and his Russian counterpart, Mikhail Fradkov.

RosUkrEnergo currently buys Turkmen gas at $65 per 1,000 cu m and delivers it to Ukraine via pipelines in Uzbekistan, Kazakhstan and Russia to sell at $95/1,000 cu m.

However, Turkmenistan recently increased the price to $100/1,000 cu m for gas shipments starting in October, which, including transportation costs, boost the price at the Ukrainian border to $135/1,000 cu m.

The fact that RosUkrEnergo will keep the price it charges Ukraine unchanged at $95/1,000 cu m shows that the parties have agreed to use other ways to compensate RosUkrEnergo’s losses, analysts said.

The deal will probably affect supplies of about 8 billion cubic meters that is supposed to be delivered to Ukraine in Q4, analysts said.

Meanwhile, Russia decided to reduce gas supplies to Ukraine during the next three years compared with what had been originally promised, suggesting that Ukraine will not be able to resume independent exports of gas to Europe.

Gazprom on Wednesday promised to supply 55 billion cu m of gas to Ukraine annually in 2007-2009, down from 62 billion cu m/year that had been earlier promised, Boyko said.

The latest supply volumes show that Ukraine will import only enough gas for domestic use, but will not be enough to restart re-exports of gas as it had hoped earlier this year, analysts said.

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USD 26.21 26.23
RUR 0.421 0.421
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