Ukraine halts natural gas imports from Slovakia

Макроэкономика 10.01.2014 The Ukrainian government has stopped importing natural gas from Europe because the new price for Russian gas it secured is lower, Energy Minister Eduard Stavytskiy said on Jan. 9. Statvytskiy had said on Dec. 25 that the government plans to sign an agreement with Slovakia to arrange gas supplies, citing the relevance of diverse gas supplies. Ukraine will pay USD 268.5/tcm for gas from Russia upon quarterly review, according to the Dec. 17 agreement. Alexander Paraschiy: While the Ukrainian government’s decision may seem economically justified, it’s beyond the state’s strategy to diversify gas sources. This lack of diversification clearly raises the Ukrainian government’s dependence on the good will of Gazprom, which will solely decide on prolonging its gas discount per quarterly review. Unfortunately, it will consider Ukraine’s political track in reaching its decision. We expect private gas importers such as DTEK to continue buying gas in the West, for both economic reasons (as it won’t receive a lowered retail gas price so quickly) and for diversification.