Ukraine May Be Fined for Cutting Russian Gas Imports

October 21, 2013

Ukraine’s incomplete receipt of gas in 2013 may cause fines of almost ten billion dollars, Itar-Tass reported on October 20, citing the National Energy Security Foundation which analyzed the current situation in Ukraine’s gas market.

The Foundation’s Director General Alexei Grivach says “Naftogaz once again breaches the “take and pay” term and will receive from Gazprom a new invoice in early 2013.”

“We doubt, within the year Naftogaz will be able to buy from Gazprom over 17-18 billion cubic metres. While it is obliged to buy 41.6 billion. As the average contracted price is 410 dollars per one thousand cubic metres, the unused amount will cost close to ten billion dollars.”

Besides, the Foundation says the claims about high prices for gas, referring t gas on reverse gas from Europe, are not quite correct.

“Early this year, Ukrainian officials said the Russian natural gas was much more expensive than the reverse gas. In February-March the difference made 36-39 dollars per one thousand cubic metres. However, those are average prices on imported gas for Ukraine. But Naftogaz and Ostchem /Ukraine’s second largest importer, controlled by Dmitry Firtash/ bought gas from Gazprom at different prices,” Grivach said. “Firtash’s companies paid higher prices than Naftogaz.” The price difference in the first quarter made about 30 dollars. Thus, the average price of import from Russia was 420 dollars. If all the gas were bought by Naftogaz, the price would have been at the level of 406-407 dollars, thus being close to that of the reverse supplies.”

“In the beginning of the third quarter /July-August/, as Ostchem lowered the import, and Naftogaz began to import gas to fill the storages at the expense of Gazprom’s prepayment, the prices were about equal /with the difference of only four dollars, though the amounts were incomparable/ reversed gas - much less/,” the foundation said.

“Thus, the liberalisation of import /beginning of gas supplies from Europe/ made the Russian gas price for Ukraine grow and become higher than the one Kiev used to call bondage,” Grivach said.

Copyright: Itar-Tass, 2013