Ukraine opts to buy European gas over Russian supplies

Ukraine has refused to buy gas from Russia for the price offered by Gazprom, as the price on the European hubs is more favourable, the Prime Minister Arseny Yatsenyuk said in a statement over Sunday.

He added that Ukraine’s incumbent Naftogaz was offered to pay $212.00/thousand cubic metres (kcm) for gas from Russia, while the price on the European hubs is currently around $200.00/kcm.

Gas sourced from the EU and delivered to Ukraine is often priced at the central European hubs. On 31 December, ICIS assessed Austrian VTP gas for delivery in Q1’16 at €16.038/MWh. This is €2.451/MWh below the price offered by Russia.

Flows from Russia to Ukraine stopped in early November when Naftogaz completed purchasing around 2 billion cubic metres (bcm) of gas from Gazprom for $500m allocated by the European Union.

Storage level

Yatsenyuk also said that there was enough gas in Ukraine’s storage to make it through the winter. He previously expressed concerns about the fullness of Ukrainian stocks, however.

As of 9 January, 12 Ukrainian storages were holding 12.9bcm of gas, which is around 2bcm more than the amount they held at the same period last year, according to Ukrainian grid operator Ukrtransgaz.

The storage withdrawal rate rose 27% to the average of 95mcm/day over the week to 9 January, with storage reducing by 5% over this period.

European exports

Ukraine’s imports from Slovakia fell 12% week on week to the average of 15mcm/day over the week to 10 January, data from the Slovak grid operator Eustream showed. But overall, the January flow rate is currently almost 12% above that recorded over December.

Flows from Poland to Ukraine continued to fall for a second week in a row. Data from the Polish transmission system operator (TSO) GAS-SYSTEM showed that flows reduced 38% between 3 January and 9 January compared to volumes imported over the previous seven days.

But flows from Hungary to Ukraine more than doubled over the week to 9 January, according to the Hungarian grid operator FGSZ.

Over that period Ukraine imported around 10mcm of gas, with daily Hungarian supplies increasing almost three times from the beginning of the year compared to the average flow rate between late September and December last year.

Meanwhile, Russian transit flows to Europe via Ukraine increased 7% over the week to 9 January to the average of 210mcm/day, according to Ukrtransgaz. ekaterina.kravtsova@icis.com