Ukraine may boost Russia gas imports in case of 3Q discount

Обзоры по компаниям и отраслям 09.06.2015 Ukrainian Energy Minister Andriy Demchyshyn expects Ukraine will reach an agreement with Russia on a discount for gas imports for the third quarter of 2015, according to media reports on June 8. He estimates that discount-less price for Russian gas would be USD 295-296 per tcm in 3Q15, compared to USD 347 in 2Q15. This implies that the discounted price will be close to USD 207/tcm in 3Q15 (vs. USD 247/tcm in 2Q15). The minister expects that the price of Russian gas, therefore, will be less than the price of gas that Ukraine is currently importing from EU countries, or about USD 250/tcm. Demchyshyn hinted that there would be no need to pay an extra price for EU import in 3Q15, providing that Ukraine receives the discount from Russia. By the start of heating season (mid-October), Ukraine needs to accumulate 19 bcm of natural gas, according to the minister. At this moment, Ukraine has accumulated 10.5 bcm of gas in its storage facilities. Alexander Paraschiy: By providing the gas discount to Ukraine for 3Q15, Gazprom would be securing a significant increase in gas sales to Ukraine, which would make the deal mutually beneficial. However, the Russian government, which determines the discount by providing tax exemptions for Gazprom’s exported gas, is not likely to be focused solely on the economic benefits for Gazprom. Therefore, it’s hard to believe that the discount will be only provided in exchange for an increase in gas purchases.