Ukraine may extend capacity booking deadline for Russian transit

Aura Sabadus

13-Dec-2019

LONDON (ICIS)–Russia’s Gazprom may have until 31 December to book capacity for the transit of Russian gas via Ukraine after the deadline is set to be extended, Yuriy Vitrenko, executive director of Naftogaz confirmed to ICIS on Friday.

Under a resolution by the Ukrainian regulator NERC published on 14 November 2019, the Russian producer was expected to book annual capacity of up to 14 years by Friday, 13 December,

However, following another round of talks in Vienna on Friday, Naftogaz, the Ukrainian gas grid operator and Gazprom agreed to continue discussions.

Writing on Facebook Vitrenko said it was “too early to talk of an agreed option.”

A source close to discussions said the regulator was looking to publish a new resolution for capacity booking and explained that the publication deadline for transit tariffs would also be brought forward from 29 to 26 December.

“The Ukrainian grid operator and the regulator are working to create as much flexibility as possible,” the source said.

Meanwhile, traders were also expecting to see how much capacity would be allocated at border points that have been traditionally used for the transit of Russian gas from Ukraine. The capacity is due to be tendered on Monday 16 December.

The exit capacity offered from Ukraine to Hungary for January was initially published at 17GWh/day but was later lowered at 13.6GWh/day. The capacity will be tendered on the regional RBP platform.

FRANTIC SELLING

Earlier reports by the Russian wires on Friday had suggested that a preliminary agreement may have been reached.

A Gazprom statement published later in the day appeared to reject the claims, merely stating that the parties had discussed cooperation in the gas sector from 2020.

Nevertheless, the reports led to frantic selling on European markets around 15:00 London time, when the TTF Q1 ’20 price dropped by around €0.50/MWh in less than 20 minutes to deal below €14.00/MWh.

Ukraine and Russia are currently negotiating a new transit agreement for Russian gas to Europe and Turkey once the existing 10-year contract expires on 31 December.

NEGOTIATIONS

In a previous round of talks last week Naftogaz said it was ready to buy Russian gas in lieu of $3bn owed by Russian producer Gazprom through an arbitration award, as well as to drop legal claims if a long-term transit contract is signed.

Vitrenko said last week: “To demonstrate constructiveness, we have said that we are ready to consider obtaining gas from Gazprom to pay off debt under the Stockholm arbitration award.

“We are also ready to withdraw our claims in the new arbitration, but only if a long-term transit contract that covers costs is included and Naftogaz is compensated for Gazprom’s failure to fulfil its obligations under current contracts.”

Gazprom was ordered by a Stockholm arbitration tribunal to make a payment of $2.56bn to Naftogaz for under-delivered gas as part of a long-term transit agreement that expires on 31 December 2019.

Additional reporting by Thomas Rodgers

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