Trade Resources Industry Views Ukraine Will Not Import Russian Natural Gas Through Year's End: Minister

Ukraine Will Not Import Russian Natural Gas Through Year's End: Minister

Ukraine will not import Russian natural gas through the end of the year due to weaker domestic demand and sufficient gas reserves, Energy and Coal Industry Minister Volodymyr Demchyshyn said Monday.

Ukraine, which resumed Russian gas imports October 12, significantly reduced imports three weeks ago, citing high gas prices.

"Our gas reserves are sufficient and everybody feels comfortable," Demchyshyn said at a press conference. "That's why there is no critical necessity to make any advanced payments [to Russia]."

Ukraine imported about 2.35 Bcm of Russian gas between October 12 and November 21, mostly addressing concerns over the need to replenish its underground gas storage facilities ahead of winter.

But weaker domestic demand for gas, caused by shutdowns of many manufacturers in its Donetsk and Luhansk regions due to Moscow-backed pro-Russian separatist uprising, led to greater-than-expected gas stocks.

"As of right now, consumption is considerably less than we have expected," Demchyshyn said. "That's why there is sufficient amount of gas in the storage facilities that we can use without resorting to [new] imports [from Russia]."

Ukraine had 16.52 Bcm of gas in its underground gas storage facilities as of Sunday, down 1.9% from November 15, according to Naftogaz Ukrayiny, the national energy company.

Ukraine is expected to have at least 16 Bcm of gas in storage at the end of November, Demchyshyn said.


Ukraine will continue to import European gas at the same robust pace and at lower-than-Russian gas prices, Demchyshyn said.

"[W]e continue to import 30 million cu m of [European] gas [via Slovakia] in reverse mode, taking into account a price difference," Demchyshyn said.

The comment underscores Ukraine's commitment to further diversify its gas imports away from Russia.

Ukraine imported 444.9 million cu m of European gas via Slovakia between November 1-21, according to UkrTransGaz, the state-owned gas shipping company.

Ukraine imported 361.9 million cu m of Russian gas in the same period, according to UkrTransGaz.


Ukraine has previously complained that Russia was charging a high price of $227/1,000 cu m in the fourth quarter and asked Gazprom repeatedly to lower the price to make it "competitive."

Andriy Kobolev, head of Naftogaz Ukrayiny, recently indicated the company expects the price to drop to below $209/1,000 cu m within months.

Kobolev said that unless Gazprom reduces its prices, Ukraine may suspend Russian gas imports in January, relying completely on imports of European gas.

Demchyshyn said Ukraine and Russia will have to reach an agreement on gas prices by December 20 in order for Ukraine to be able to import Russian gas in January.

"I think we will have an agreement in the near future," Demchyshyn said.

Ukraine will need to import about 5 Bcm during the six-month heating season ending in April, according to Prime Minister Arseniy Yatseniuk.

Ukraine can completely rely on imports of European gas via Slovakia to meet winter demand, according to Platts analysis.

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Topics: Metallurgy