NITROGEN: Russia hikes Ukrainian gas price further

03 April 2014 16:32 Source:ICIS

On 3 April, Gazprom CEO Alexei Miller said it was further increasing the price of natural gas from Russia to Ukraine to $485/’000cbm DAF from April as it was cancelling a $100/’000cbm discount Ukraine had enjoyed under the Kharkov agreement. The agreement had guaranteed Ukraine the discount in return for using the Sevastopol port to host its naval fleet, but Sevastopol is now under Russian control.

On 1 April, Gazprom had announced a price of $385.50/’000 cbm DAF for natural gas to Ukraine for the second quarter, up from $268.50/’000 cbm DAF in Q1.

The new price would imply ammonia production costs around $560-580/tonne FOB for the lowest cost producers, and urea production costs of around $365-385/tonne FOB. However, it is not clear which nitrogen producers actually pay these price levels.

By Rebecca Clarke