Ukraine’s national oil and gas company Naftogaz and Russian gas monopoly Gazprom have signed a technical addendum to their gas supply contract, extending key elements of the Brussels-mediated “Winter Package” until the end of June 2015, Ukrainian energy officials said on April 2.
In particular, the pricing mechanism, the payment regime and the principle of a flexible ordering schedule have been extended. The price of Gazprom gas for Ukrainian consumers in the second quarter of 2015 is estimated at $248 per 1,000 cubic metres. In the first quarter of 2015 Ukraine paid $329 per 1,000 cubic metres for Russian gas.
Slava Smolyaninov, a strategist at BCS, a brokerage firm in Moscow, told New Europe on April 2 that any sort of compromise in negotiations between Russia and Ukraine is always a relief. “Russia depends on Ukraine as a consumer just as much as Ukraine depends on Russia as a supplier. So it should be some sort of win-win deal,” he said.
The technical addendum aims to regulate supply conditions until a further deal is reached, Naftogaz said.
“Gas should be sold based on commercial principles. This short-term extension of the Winter Package gives the parties additional time to develop a longer-term solution,” Naftogaz CEO Andriy Kobolyev said. “Ukraine appreciates the ongoing support of the European Commission, which has been vital in facilitating negotiations and ensuring that transparent business practices can be established,” he added.
Despite being at loggerheads over the conflict in Eastern Ukraine, Kiev and Moscow are bound by a 10-year gas agreement signed in 2009. Ukraine has accused Russia of charging unreasonably high gas prices.
Apart from the price, the latest agreement extended all the other terms of the “Winter Package” which has just lapsed between Naftogaz and Gazprom.
See also:EU, Russia, Ukraine to kick off gas talks
Ukrainian Energy Minister Volodymyr Demchyshyn said on April 1 that Ukraine hoped to sign a memorandum with Moscow this month on supplies that would run until the end of March 2016.
Russia and Ukraine agreed last year on a “Winter Package” for supplies with a price discount of $100 per 1,000 cubic metres and advance payments, but that accord expired on April 1 and had to be replaced. A requirement for prepayment for Russian gas supplies by Ukraine, whose economy struggles, will reportedly stay in place.
See also: EU calls on Russia, Ukraine to respect Winter Package deal
On April 1, European Commission Vice President for Energy Union Maros Sefcovic said he would broker talks in the middle of April and was hopeful of being able to negotiate more favourable terms for Ukraine.
Russia had already said it would extend a gas price discount for Ukraine into the second quarter, though Russian President Vladimir Putin was quoted as saying that any further decisions would be taken in three months and depend on the price of oil.
Smolyaninov told New Europe that the three-month agreement is a positive signal. “Gazprom has always been a conductor of the political will of Russia so in that respect it should be considered as positive. I think the market is right. I noticed that Gazprom is doing a little bit better than the market overall today. So it’s good news,” Smolyaninov said. “But I wouldn’t be jumping to far-going conclusions. It’s just another small step in the right direction.”
http://www.neurope.eu/article/ukraine-secures-3-month-discount-gas-deal-russia