Ukraine has overpaid for gas over $115 million

Ukraine has overpaid for gas over $115 million

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The gas price for Ukraine under contract with Gazprom in the fourth quarter will grow by 4.4%, but will remain cheaper prices through reverse

Photo: TASS/Valery sharifulin

Ukraine from November 25, 2015 imports gas from Slovakia, Hungary and Poland. The contract with “Gazprom” it is not satisfied with the price and the mandatory prepayment. However, despite the increase in the price of Russian gas for Ukraine by 4.4% in the fourth quarter of 2016, the cost still remained below prices on the European markets.

The price of Russian gas for Ukraine in the fourth quarter for an existing contract with “Gazprom” is $175 per thousand cubic meters, while in the third quarter was $167,57 per thousand cubic meters, told “Izvestia”, the independent expert of the national energy security Fund Alexei Grivach.

According to him, Ukraine in the III quarter could save about $100 million by buying gas from “Gazprom”. The price of gas reversed schemes with the beginning of the heating season will only grow. “I think that from October the price of gas on the reverse schemes has increased, because the heating season has started. Prices on European markets went up,” — said Grivach.

He cited data of the Ministry of economic development of Ukraine, according to which in the third quarter reversal schemes, the country bought gas for $200-211 per thousand cubic meters. “In the third quarter they imported 3.3 billion cubic meters of gas, totaling $667 million, overpaying for these supplies about $110 million,” — said Grivach. “For the money they could buy from Gazprom additional 600 million cubic meters of gas,” — said the expert. He added that in the first half of the overpayment was small — $5-6 million

At the end of August the head of Ministry of Ukraine Igor Nasalik said, what to buy gas from “Gazprom” it would be cheaper at $45 per cubic meter. “We pay for transit through Ukraine, and across Europe and back, and today the price is $185. Direct contract with Russian the price would be $140,” — quoted by “RIA Novosti” the statement of the Ukrainian Minister.

However, top managers of “Naftogaz” over the years repeatedly declared that the gas reverse from Europe bypassing Ukraine cheaper direct supply contract with Gazprom. In August, the commercial Director of “Naftogaz of Ukraine” Yuriy Vitrenko said that for two years, Kiev was able to save due to the reversal of $400 million.

To resume the purchase of gas Kiev asks “Gazprom” discount. In early June, Naftogaz has asked Gazprom to resume deliveries in the second half of 2016 and in the first quarter of 2017, but only under the condition of reducing the price. Russian energy Minister Alexander Novak said that the discount on gas for Ukraine is not necessary because the price on the European hubs are above the prices in the contract with “Gazprom”. The Minister also noted that Ukraine would be appropriate to be pumped into underground gas storage (UGS) another 1.5–2 billion cubic meters of gas for reliable passage of the autumn-winter period and the transit of gas to European consumers.

Grivach agree with the Minister, because in the II and III quarters of the price formula in the contract with Gazprom is lower than in neighbouring countries. He recalled that in the first quarter of 2016, discount Ukraine was granted, because the gas price formula in the contract are more expensive. “In the fourth quarter, the price formula will be below the quotations on the spot”, — concluded the expert.

According to “Ukrtransgaz”, as of October 18, the gas reserves in UGS of Ukraine was 14,723 billion cubic meters. “Interfax” in late August, wrote with reference to the Vice Prime Minister of Ukraine Stepan Kubiv and that Kiev for the heating season has decided to increase the reserves up to 17 billion cubic meters. However, with the onset of the heating season Ukraine stopped pumping gas into underground storage and the beginning of the selection in the amount of 1.2 million cubic meters per day. This was reported by press Secretary of PJSC “Ukrtransgaz” Maxim bielawski.

According to the analyst of Raiffeisenbank in the oil and gas industry Andrey Polishchuk, the volume of stocks of the Ukrainian underground gas storage is not critical: “the Volume in underground storage facilities of Ukraine is not critical, compared to the previous year, a decline of 15%. If the weather is comparable to last year, to buy the gas to Ukraine will not have”, — says the analyst.

Polishchuk questioned the possibility of the suspension of transit of Russian gas to Europe: “Such risks exist, but when the frosty winter Ukraine compensates the deficit through direct purchases from Gazprom. The suspension of transit is hardly possible, because nobody is interested. Besides, from the European side this is control.”

In “Gazprom” operational review did not provide.