Ukrainian exchange brokers trade for foreign suppliers

International energy companies have started to use the Ukraine’s Universal Interbank Commodity Exchange (UICE) to sell gas to Ukrainian industrial consumers, a UICE spokesman told ICIS on Monday.

The spokesman said companies in Ukraine were interested in buying gas from Europe via the bourse, which facilitates gas trading by brokering bilateral deals between Ukrainian and foreign companies.

Gas trading was launched at UICE in August and was expected to continue on a regular basis from 1 October, when the law on market liberalisation came into effect in Ukraine. The launch of regular trade was later postponed until 2016.

“Trades are brokered regularly now, but there are days when there are no bids,” the spokesman said.

The first trade involving a foreign company took place on 23 December. A European trader – whose name the spokesman declined to reveal – sold 20.8 million cubic metres of gas for January delivery to Odessa Port Plant for $230/thousand cubic metres (kcm) (€20.1/MWh). Gas was delivered to Ukraine via the Budince border point with Slovakia and Beregdaroc border point with Hungary.

Gas sourced from the EU and delivered to Ukraine is often priced at the central European hubs. On 23 December, ICIS assessed Austrian VTP gas for delivery in January ‘16 at €15.60/MWh. This is €4.457/MWh below the price Odessa Port Plant paid via the UICE. However, additional costs are required to transport gas from Austria to the Ukrainian border.

The spokesman said that trades do not take place often because prices offered at the bourse are usually above those on the over-the-counter (OTC) market.

“There are offers of $260/kcm in our system, this is much higher than the price Ukrainian companies are currently paying for gas delivered from Europe on the OTC market,” he said.

Odessa Power Plant did not reply to ICIS request for comment. Other companies which took part in UICE trades before – Karpatygaz, Zaporozhspetsstal and Regal Petroleum – were not available for comment. ekaterina.kravtsova@icis.com