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European Union

Russia and Ukraine Agree on New Gas Deliveries

Strategic Insights

— 2 min read

Ukraine and Russia have reached an agreement on new gas deliveries for the winter season, with Moscow agreeing to cut its prices through decreasing export duties. This move is expected to allow Ukraine to purchase two billion cubic meters of gas for storage in its underground reservoirs. The price Ukraine will pay for the gas in the fourth quarter of 2015 is $227 per 1,000 cubic meters, down from $268 in the second quarter.

Key Takeaways:

  • The agreement will allow Ukraine to purchase two billion cubic meters of gas for storage in its underground reservoirs.
  • The price Ukraine will pay for the gas in the fourth quarter of 2015 is $227 per 1,000 cubic meters, down from $268 in the second quarter.
  • The price is likely to fall by at least a further 5 percent in the first quarter of next year, depending on world oil prices.
  • Ukraine's Energy Minister Volodymyr Demchyshyn stated that the price may further decrease if world oil prices continue to fall.
  • Ukraine is expected to receive at least $500 million in loans from international financial institutions, including the European Commission and the World Bank.
  • The European Bank for Reconstruction and Development (EBRD) approved a loan of $300 million to Ukraine's national oil and gas company Naftohaz Ukrainy for gas purchases from the EU.
  • Naftohaz Ukrainy already has $500 million on its accounts for gas purchases, but this was borrowed from Ukrainian state-owned banks.
  • Ukraine's reliance on gas deliveries from the EU, particularly Slovakia, has increased significantly in recent months due to concerns over Russian gas supplies.
  • Ukraine's Energy Minister Volodymyr Demchyshyn stated that Ukraine will not necessarily rely on Russian gas imports this time, especially if the coming winter is as mild as the previous one, and unless Gazprom's gas is much cheaper than gas from Slovakia.

Statistics:

  • Russia agreed to cut its gas prices for Ukraine, with the price in the fourth quarter of 2015 set at $227 per 1,000 cubic meters.
  • The price is down from $268 in the second quarter of 2015.
  • Ukraine is expected to purchase two billion cubic meters of gas for storage in its underground reservoirs.
  • The European Commission stated that Ukraine will receive at least $500 million in loans from international financial institutions.
  • The European Bank for Reconstruction and Development (EBRD) approved a loan of $300 million to Ukraine's national oil and gas company Naftohaz Ukrainy.
  • Naftohaz Ukrainy already has $500 million on its accounts for gas purchases.

Sources:

  • Europa.eu, September 25, 2015
  • Rian.com.ua, September 15, 2015
  • Ebrd.com, September 30, 2015
  • Dsnews.ua, September 28, 2015
  • Vesti.ru, September 8, 2015
  • Utg.ua, July 1, 2015

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