Breaking news: Ukraine to halt gas imports from Russia; transit to be honoured

Ukrainian incumbent Naftogaz is to halt the purchase of natural gas from Russia’s Gazprom from Wednesday, following failed trilateral discussions between the two sides and the European Commission.

Naftogaz said it will honour all transit agreements between Gazprom and its customers in the EU and Turkey.

The move is likely to lead Naftogaz to increase its purchase of gas from the EU’s hubs. The added demand is likely to boost wholesale prices, particularly for the coming winter.

The Dutch TTF front season climbed to €22.00/MWh in early trade on Wednesday, up €0.20/MWh from its closing assessment on Tuesday evening.

Earlier this week, Russian prime minster Dmitry Medvedev reduced a discount Gazprom had been offering to Naftogaz, effectively holding the price for the third quarter flat to the second quarter.

As the contract is oil-indexed, with a time-lag, the price of gas for many of Gazprom’s customers will have seen a drop on 1 July.

Ukraine ships most of the gas it buys from the EU’s hubs via Slovakia. Data from Eustream, the Slovak operator, showed eastbound deliveries on Wednesday were set to be just under 14 million cubic metres (mcm). The June average was 24mcm/day.

Data from Ukrtransgaz, the Ukrainian grid operator, showed that for much of last month Russia supplied Ukraine with an average 17mcm/day. tom.marzec-manser@icis.com