Naftogaz prepays Gazprom for 0.72 bcm of gas in February

Макроэкономика 04.02.2015 Ukraine’s state natural gas monopoly Naftogaz paid USD 107 mln to Gazprom as prepayment, the Interfax news agency reported, citing Gazprom press service on Feb. 3. With prepayment carryovers from January, Naftogaz has currently prepaid for 715 mcm of gas at the price of about USD 329/tcm, according to Gazprom. At the beginning of January, Naftogaz’s prepayment amounted to 1 bcm of gas, while the company imported less than the prepaid amount last month. Alexander Paraschiy: All the above means that Naftogaz has prepaid for 1.72 bcm of gas for January-February, and for about 2.21 bcm of gas for four out of the five months during which the “winter deal” is valid, as signed with Gazprom on Oct. 30. Thus far, that is less than half of Naftogaz’s initial plan to import under the winter deal (up to 5 bcm). All this prompts an intention by Naftogaz to import much less from Russia than was initially expected. By importing less, Naftogaz seems to be trying to demonstrate to Gazprom that Ukraine does not need much Russian gas. Such a demonstration could strengthen Naftogaz’s bargaining position before talks on a new gas deal (as soon as the winter deal terminates in end-March). This looks like a risky game, given that Ukraine will need to import totally up to 6 bcm of gas from Russia this year to balance its market. As last year’s experience suggests, a new deal with the Russian side could take many months to reach. Meanwhile, the gas amount in Ukraine’s underground storage facilities was just 9.3 bcm as of end-January, which is a 42% decline since the date of the winter deal’s signing and about 15% less yoy.