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Ukraine to resume Russian natural gas imports by end-March: Naftogaz chief

Highlights


Ukraine to buy up to 5 Bcm of Gazprom's gas

Naftogaz, Gazprom to begin talks within days

London β€” Ukraine will resume imports of Russian natural gas before the end of March, Andriy Kobolev, the head of national energy company Naftogaz Ukrayiny, said Wednesday.

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"We will start buying Russian gas as soon as the first quarter," Kobolev told reporters. "This is our intention."

The comment shows Ukraine will seek to capitalize on low gas prices given the contango in the oil-indexed contract formula.

Ukraine suspended imports of Russian gas in November 2015 due to a dispute over prices and supply volumes. Imports will resume following a recent ruling by the Stockholm arbitration court that lowered mandatory imports and also lowered gas prices.



The Stockholm court is expected to rule on a high-stakes gas transit dispute between Naftogaz and Gazprom by the end of February.

Naftogaz is expecting to import up to 5 Bcm of gas Russian gas in 2018 below European gas prices, Kobolev said.

However, Ukraine will also continue to import European gas in order to keep import sources diversified, he said.

Meanwhile, Naftogaz and Gazprom will soon begin negotiations aimed at implementing the recent Stockholm court ruling, Yuriy Vitrenko, the commercial director at Naftogaz, said Wednesday.

"The negotiations are beginning now, within the next several days," Vitrenko said. "I cannot disclose any details, but the talks will be aimed at implementing the Stockholm ruling."

Ukraine will have to import at least 4 Bcm/year of Russian gas in 2018 and 2019 on as part of the "take-or-pay" clause of the contract between Naftogaz and Gazprom.

The original contract, signed in 2009, called for Ukraine to buy 52 Bcm of gas annually through 2019.

The agreement allows Ukraine to cut gas imports to 41.6 Bcm/year without penalty and to 33.3 Bcm/year with Gazprom's written consent.

Ukraine increased imports of natural gas in 2017 by 27.1% year on year to 14.05 Bcm, from 11.05 Bcm imported in 2016, according to Naftogaz.

--Alexander Bor, newsdesk@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com