Ukraine to forgo Russian gas deliveries in Q1 of 2016

Ukrainian energy firm chief says Russian gas imports to be halted in early 2016 if competitive prices not offered

Photo by: Reuters
Photo by: Reuters

Ukraine to forgo Russian gas deliveries in Q1 of 2016

Ukraine looks set to forgo deliveries of natural gas from Russia in the first quarter of 2016 if Russia fails to offer a competitive price, the head of the country’s energy firm said.

Speaking at a company briefing in the Ukrainian capital Kiev on Tuesday, Naftogaz Ukrainy Chief Executive Andriy Kobolev said he hopes that “Russian gas sellers will be rational and propose competitive prices” to Ukraine.

"If there is no such offer we will be purchasing all gas from Europe," he said, adding that there was no need to sign additional agreements for the first quarter of next year.

"The mechanism of agreement signed this year does not implying signing of any documents for the first quarter of next year."

Kobolev also said he is expecting "a serious fall" in the price of gas in the second quarter of 2016.

Furthermore, Ukraine began taking gas from its 17 billion cubic metre-capacity underground storage facilities, Kobolev said, reassuring that the reserves were sufficient to pass the seasons.

However, the reserves are 2 billion cubic metres less than the 19 billion cubic metres needed to pass the the winter, according to Ukrainian Energy Minister Volodymyr Demchyshyn.

"Unfortunately, it’s impossible to accumulate 19 billion cubic meters of gas we’ve been talking about, by the end of the year, despite the funds from the EBRD (European Bank for Reconstruction and Development)," Demchyshyn said last week.

According to the CEO of Russian state-owned energy firm Gazprom, Alexey Miller, Naftogaz has only made a payment for another five days of gas deliveries.

On Monday, Miller said, “Since the beginning of November, Ukraine has decreased its consumption of Russian gas threefold because of Naftogaz’s financial deficit. Gas prepayments only cover five days.”

Ukrainian gas purchases from Gazprom were halted in July after the two sides failed to agree a price for the third quarter of 2015.

However, deliveries from Gazprom to Ukraine resumed on Oct. 12 after a $234 million prepayment from a promised $500 million deal was agreed with Naftogaz.

A deal was also reached between Russia, Ukraine and the European Commission in September to deliver 2 billion cubic metres of gas from Russia between Oct. 1 and the end of March 2016, covering the peak period of consumption.


TRTWorld and agencies