Russian natural gas supplies to Ukraine expected after payment

Natural gas deliveries to Ukraine from Russia are expected to resume this week, after Ukrainian oil and gas incumbent Naftogaz paid in advance for 1 billion cubic metres (bcm) of gas from Russia’s Gazprom to be supplied during December.

The payment was announced late on Friday evening by Naftogaz, which said it transferred $378m (€308m) to the Russian supplier. Gazprom received the payment at around 02:00 Moscow time, on Saturday, a Gazprom spokesman said. But the company is still awaiting a Ukrainian letter of request for exact volumes.

Ukrtransgaz said direct imports from Russia would commence on 11 December, although this date could not be confirmed by Gazprom. Should Russian flows start again on Thursday, Ukraine would receive 50 million cubic metres (mcm)/day for the rest of the month.

Ukraine, Russia and the EU signed a winter supply package on 30 October, which has seen Naftogaz pay off $1.45bn of its debt to Gazprom for gas supplied in November and December 2013 and April to June 2014. The country still needs to pay a further $1.65bn by the end of the year, as part of the deal.

Since then, Naftogaz has aimed to buy as little gas from Gazprom as possible before the end of the year. This is because the oil-indexed gas pricing formula that Russia will charge is expected to come down to $365/thousand cubic metres (kcm) from 1 January 2015, from the current price of $378/kcm.

Once deliveries commence, it will be the first time since 16 June that Russia has supplied Ukraine with gas intended for domestic consumption.

Ukrainian transit

Gas volumes to Hungary from Russia through the Ukrainian border point of Beregovo have dropped since Friday, according to the latest Ukrtransgaz data. In the first four days of December, 22mcm/day of gas had flown through this point. On Friday, this dropped to 17mcm and again to 12mcm on Saturday (see separate story for further details).

On the Romanian border point of Orlovka, which is the route which transits Russian gas to Turkey, volumes have jumped up to 53mcm/day in December so far, from roughly 37mcm/day throughout November, according to Ukrainian system operator.

Volumes at the Velke Kapusany entry point into Slovakia have remained stable at around 48mcm/day.

At the Russian/Ukrainian point of Sudzha, which is on the north-eastern border, volumes have been falling since 3 December, Ukrtransgaz data shows. Volumes dropped from 63mcm on 2 December to 52mcm on 3 December. By 6 December this had fallen to 48mcm.

This drop may have been partially offset by an increase in volumes through the Sokhranivka point.

Ukrainian storage

The amount of gas held in Ukrainian storage sites fell by 860mcm in the seven days to Saturday, according to Ukrtransgaz.

This is 151mcm more than the 709mcm withdrawn a week earlier.

The latest drop brings the country’s 12 storage sites to just under 43% of capacity, at 13.26bcm. Miriam Siers