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Tuesday, December 6, 2016

Ukraine is lying again, comparing gas prices from Russia and from Europe


The representative of the Ukrainian Naftogaz expressed their wishes about the price of Russian gas. The claim was made that the price on the European spot market to Ukraine, lower than Russia offers. However, it glossed over several important factors, due to which Ukraine will be forced to pay more for gas, we get the reverse from Europe.

“The energy Minister said that Gazprom in the third quarter, we will sell gas for 177 dollars. Adjusted for calorific value this means that the price of acts will 182-183 dollar. He thinks it’s even lower than the market price,” – wrote in “Facebook” Director business development “Naftogaz of Ukraine” Yuriy Vitrenko.

“Let Vitrenko go and buy gas in Germany for 173 minus shipping costs. Has never failed”

“We do not think so. Yesterday on the German market (NCG hub) price for July, for example, was below $ 173. We, therefore, in such circumstances, the gas from Gazprom to buy all will not. All the necessary buy gas on the European market. The benefit with this we have problems now, no, no,” he said.

“And the fact that the price of Gazprom remains at a level even higher than the German hubs, will be to us a sufficient argument in the same Stockholm arbitration”, – said Vitrenko.

According to him, the price of Russian gas for Ukraine should be determined according to the “German hub minus transport him from the border of the Russian Federation – Ukraine”. Thus, for the first time Ukraine has called the price at which wants to buy Russian gas from July 2016 to March 2017: below 177 USD per thousand cubic meters.

However, price is not the only condition of Kiev. Naftogaz also demands in the form of a contract Addendum from the 2009 waiver of the conditions “take or pay” in the next three quarters to pay for the gas could not be awarded in lieu of payment of previous debt under the “take or pay”. “If it is not, we won’t buy their gas, thus we will not risk our legal position in the Stockholm arbitration”, – wrote Vitrenko.

Gazprom may well go to all the conditions, except for price. He already made exceptions for the rule “take or pay” in the “winter package” on gas. And the debt of Naftogaz to Gazprom is engaged in a Stockholm arbitration court. Discount on Russian gas is also not provided to Naftogaz, but this time the reasons for this.

“So let Vitrenko go and buy there (in Germany) gas at 173 minus shipping costs. If you can buy, it is possible for it to issue a medal – ironically, the Deputy General Director national energy security Fund Alexei Grivach. – Has never failed, because the price of reverse gas for Ukraine is the price in the hub plus transport costs, plus a margin provider”. And this can be an additional 20-30 dollars per thousand cubic meters and more.

Thus, the reverse gas Ukraine can buy at a price even more than $ 200 per thousand cubic meters. While Russian gas is $ 177. Reasoning Vitrenko on caloric gas and about 182-183 dollars per thousand cubic meters – no more than rhetorical manipulation.

A calorie is the technical characteristics of the calorific value of gas. With more high-calorie gas is obtained more energy, so there is a small surcharge. “But not consumed gas volumes, namely calories, so in terms of calorific value obtained is still the same price of 177 dollars,” – says Grivach. So the real price is still not 182-183, and just 177 dollars.

According to Vitrenko, it is about that price is referred to in the third quarter, although it is not known yet what it will be. The price is determined on the basis of the cost of a basket of petroleum products in the previous nine months, so definitely the price will be known only on June 30. “However, 177 dollars per thousand cubic meters – this is consistent with our estimates for the third quarter. It will be 5% less than the cost of reverse gas to Ukraine”, – said Grivach. Thus, the reverse of Ukraine will buy for $ 186 per thousand cubic meters.

In this light, the requirement Vitrenko, that Russia should make the price of gas below $ 177, looks even more insane. Not to mention it changes the formula of the contract about which the parties already have legal proceedings in the Stockholm arbitration. Before the court decision, Gazprom did not even think to take such a step, which immediately weaken his position in the arbitration.

“The Russian side rightly believes that prices, which are formed in a long-term contract, is now fully reflect the market situation. This means that they are competitive compared to alternative fuels. And it always has been. Sometimes this result had to be achieved through the provision of discounts from the government of the Russian Federation by reducing export duties without making any changes to the contract. Often Ukrainian colleagues still prefer to buy the more expensive reverse gas,” – says Grivach.

Earlier, the head of the Ministry of energy Alexander Novak has said Ukraine is that discounts can not see it. “From our point of view, a valid contract until the end of 2019 completely determines all the conditions of cooperation between the two companies, and, accordingly, the price obtained by the formula contract brand market… If there will be money from the Ukrainian side – please, they can buy gas in accordance with the current contract,” said Novak earlier.

“That is the question: whether Naftogaz funds. As we see and hear, they are trying to get a loan from international financial organizations, and we understand that they are ready to buy. But if these tools are not yet refined, you can carry on any dialogue, throw in the media and so on”, – said the Minister.

The head of Gazprom Alexey Miller, in turn, had previously warned Naftogaz that he was already far behind the charts last year in preparation for the winter, to catch up, the company urgently needs to increase the daily pumping gas more than 2.5 times. On the other hand, Russia is, of course, is also useful to restore the supply of fuel to Ukraine, especially in light of falling revenues from gas exports. In the first quarter of 2016, they fell by almost 26%.

However, games of Kiev pricing can have a very different purpose than the purchase of fuel for the winter at competitive prices. “Maybe they need to make excuses, saying that Gazprom wants to sell gas at the price that we want, so we will be buying a reverse. The fact that it is more expensive, is behind the scenes. Perhaps they are trying to exert pressure on European traders or structure with whom negotiations on the allocation of credit resources. This is a very politicized process,” – says Alexei Grivach.

The price offered by Russia, to the cost of gas to the European hub and lower cost alternatives – reverse. “For the third quarter, the futures gas price is $ 175 per thousand cubic meters in Germany. The price in the hub in the third quarter may fall in price and increase in price. For example, in may, gas was cheaper than it is now, in June,” adds Grivach.

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