Q&A on gas supplies to Ukraine

Friday, February 27, 2015

Could gas supplies to Ukraine really be stopped?

Yes, unless Naftogaz makes a prepayment for the next month. They have 206mcm of pre-paid supplies left, according to yesterday’s data. Given the current level of daily intakes, supplies could stop by the end of this week.

What could you say about those unmatched nominations and Naftogaz complains?

In the middle of last week Naftogaz started requesting abnormally high daily amounts, without suggesting that further gas purchases would be made in line with the “Winter Package” agreement. If we had supplied those high daily amounts, Ukraine would already have taken out all gas. This would have risked endangering gas transit to Europe. Because supplies continued on a normal daily basis we had time to reach a possible solution also by discussing it with our European partners. In any case, the end of this week will be decisive.

What could you say about the delivery points?

The technical agreement to the 2009 contract indicates all delivery points, including those through which gas is now being supplied to the Donetsk and Lugansk regions. The situation in which Naftogaz does not control these delivery points is not stipulated in the contract.

What could you say about gas supplies to the Donbass region?

Ukraine cut gas supplies to those regions on 18 February leaving thousands of people facing minus winter temperatures without any heat. The Russian government ordered Gazprom to supply gas to those regions via alternative routes.  

Who will pay for gas supplies to the Donbass region?

We are in the process of solving this issue with Naftogaz.

So what is the way forward?

It’s simple. Naftogaz needs to find money to buy gas for the month of March. If there is no money, and therefore no prepayment, then gas supplies to Ukraine will not be possible. Then the question about the stability of gas transit to Europe will remain, as the level of gas in Ukraine’s underground gas storages is dangerously low at this point of the year. 

(Source: Gazprom Export)