Gazprom has received a letter from Ukraine’s Naftogaz requesting resumption of natural gas supplies, the Chief Executive Officer of the Russian gas holding Alexey Miller said.
“We have indeed received a formal letter from the Chief Executive of Naftogaz of Ukraine with a request to resume natural gas supplies. Nine months are meant: the second half of 2016 and the first quarter of 2017, that is, the forthcoming winter and the preparation period. The change in Ukrainian company’s mood is understandable. Daily reverse from Europe dropped 6.4 times in June as compared to May and 16.8 times vs. April,” TASS cited Miller as saying.
The deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, speaking to Vestnik Kavkaza, said that he doesn't think that Naftogaz or especially the Ukrainian government reviewed their positions. "Rather, it is simply about the ratio of the prices offered by Gazprom and the European prices, because the direct cost of reverse gas supplies to Ukraine is higher than the selling prices. Probably, Gazprom's offer is more competitive in comparison with offers of European companies, and this is a purely short-term phenomenon. That is, it's unlikely these supplies will last longer than few months," the expert believes.
"If we consider the period voiced by Miller, it will be from June to October, when there is a minimum gas consumption and filling gas storages with gas, for Ukraine it is a period of October 20 - March 31. Naftogaz tries every year to negotiate with Gazprom in advance about the price of gas supplies till the end of the autumn-winter period. Accordingly, it is logical that Naftogaz is trying to conclude such a contract in advance. It is possible that it will resume purchases now if Gazprom's price will be more attractive in comparison with European suppliers," the deputy director of energy policy of the Institute of Energy and Finances said.
When asked what has caused a sharp drop in the consumption of gas by Ukraine on the reverse, the expert assured that it's not about infrastructure limitations. "Most likely, Naftogaz has no sufficient means, either it is waiting for lower prices," the expert assured.
The expert reminded that for the last 10 years, the gas negotiations with Ukraine are connected with political relations and for the last two years they are part of the package of political and economic transactions with Ukraine, that is, they do not play an independent role. "As I understand, the current political goal for June is a softening of the position and reaching agreements without significant deterioration of relations," Alexey Belogoriev concluded.
Ukrainian political expert Alexei Poltorakov, in turn, expressed doubt that Ukraine radically refused to buy gas from Russia. "After all, Ukraine has a very high level of gas dependence on Russia. And the transport gas flows to Europe pass through Ukraine. Neither Russia nor Ukraine, nor Europe can do without the 'Russia-Ukraine' gas ligament. But the former ultimatum position of the counter-partners of the Ukrainian gas sector caused a crisis, when the prospects of Russian gas supplies to Ukraine zeroed before the next negotiations, and it provoked a domestic energy crisis in Ukraine, which affected the gas price in the domestic market and the optimization of supplies," the experts explained.
"Due to the fact that the Ukrainian-Russian relations are being reloaded, in particular, the sides are moving beyond rhetoric of strategic partnership, gas relations are reaching a new level. In particular, the subjective level is being reduced, which included a primarily personal agreements, starting from personal arrangements between Yeltsin and Kuchma and between Putin or Medvedev with Yanukovych. This explains the recent position of the Ukrainian side," Alexei Poltorakov noted.
As for Alexey Miller's statement about the decline in reverse gas supplies to Ukraine from Europe, the expert suggested that such statements is an attempt to initiate a restart of the gas relations between the two countries. "The difference in prices and volumes of reverse supplies through Slovakia and other EU countries is explained, firstly, by a certain seasonal reason - you need less amount of gas in the summer. For example, some sectors of the Ukrainian economy significantly reduce the volume of production. This is due to the fact that the Ukrainian economy's needs in gas are being reduced. The prices, volumes and needs of the sides in the supply and production of gas is being gradually revised during an active dialogue, and it also puts its mark on the diplomatic situation voiced by Miller," Poltorakov concluded.
