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Ukraine's Naftogaz considers April imports from Gazprom

05 Mar 2018 17:03 GMT
Ukraine's Naftogaz considers April imports from Gazprom

London, 5 March (Argus) — Ukraine state-controlled Naftogaz is considering restarting Russian imports next month, despite Russian state-controlled Gazprom's refusal to deliver gas at the start of March, Naftogaz chief commercial officer Yuriy Vitrenko said.

The Ukrainian firm will ask Gazprom if it will fulfil the arbitration court ruling next month and would consider renewing purchases if the price of European supply is higher than the cost of Russian gas, he said.

Naftogaz had planned to restart Russian imports in March and paid Gazprom for 18mn m³/d. But the Russian firm did not start deliveries and returned the payment. An additional agreement to the 2009-19 supply contracts between the firms is needed before flows can restart, Gazprom has said.

The Ukrainian firm has proposed several dates for negotiations with Gazprom, Vitrenko said. The firm and the European Commission have said that they are ready to engage in a trilateral process. But there are "no grounds" for these talks, Russian energy minister Alexander Novak said.

Naftogaz is ready to pursue a new round of arbitration if negotiations do not lead to an agreement, Vitrenko said.

Naftogaz has restarted imports from Europe this month, but is paying more than the cost of Russian supply, it said. Naftogaz is importing 25mn m³/d from Europe out of total Ukrainian imports of 26mn m³/d, Vitrenko said.

Naftogaz had expected to pay $238.55/'000m³ (€18.30/MWh) for Russian gas — in line with the NCG front-month index's settlement for March and below the price of importing gas from Europe. Prices for Russian gas are revised on a quarterly basis under the supply contract, which could make it more expensive than importing gas from Europe at times.

The firm has enough funds to pay for imports and is in negotiations with international creditors for new loans, Vitrenko said.

Difficulties in negotiations between international creditors — including the IMF — and Ukraine's government have made the renewal of the loans unlikely this year, the firm has said. But Naftogaz is a stable, profitable firm and is planning to offer eurobonds later this year, Vitrenko said.