Gazprom raises Ukrainian gas price further to $485/kcm

Miriam Siers

03-Apr-2014

Russian Gazprom will further increase the price of gas to Ukraine to $485 (€352.4) per 1000 cubic metres (kcm) from April, CEO Alexei Miller said on Thursday. This is because Gazprom has cancelled a Ukrainian exemption for its gas export duty.

The price hike is a further increase on the one announced on Tuesday, when Gazprom said it would raise the price of Russian gas to Ukraine in Q2 2014 to $385.5/kcm ( see ESGM 1 April 2014 ). Thursday’s price rise represents a 45% increase over the Q1 price of $268.50/kcm.

The average price of Russian gas to Ukraine in 2013 was around $400/kcm, which included an earlier discount of around $100/kcm granted in April 2010. The 2010 discount was given in return for Ukraine extending the lease on the Russian Black Sea Fleet base in Crimea. Now that Crimea has been taken over by Russia, the discount will not be maintained.

Yuri Korolchuk of the Kiev-based Institute for Energy Strategy told ICIS earlier this week Gazprom would seek to implement some legal changes before scrapping the discount, in order not to be seen to break conditions of the existing Ukrainian-Russian supply contract agreed in 2010.

Gazprom’s Miller said abolishing Ukraine’s exemption from customs duties in gas remains “strictly in accordance” with the current contract for the supply of gas to Ukraine.

While Gazprom’s Miller has said the second price rise will take effect from April, sources said the complicated nature of the legal procedures surrounding the discount’s cancellation may mean timings are not so certain.

Following the deposition of the previous Ukrainian government headed by Viktor Yanukovich, and the continuing crisis in Ukraine, Russian Gazprom has been emphasising the gas discount was dependent on Ukraine settling in full its gas debt to Russia ( see ESGM 4 March 2014 ).

In March, Gazprom delivered 2 billion cubic metres of natural gas to Ukraine, according to Miller. Ukraine’s March debt has not been paid, meaning the embattled country’s total debt now exceeds $2.2 billion. Miriam Siers

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