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Ukraine to start gas supplies from Europe in reverse mode from Nov 1

October 31, 2012, 22:00 UTC+3
Naftogaz Ukrainy was not immediately available for comment
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KIEV, October 31 (Itar-Tass) —— Ukraine is ready to receive reverse flows of natural gas purchased from RWE Supply and Trading (RWE ST, Germany) from November 1.

RWE Supply and Trading and Naftogaz Ukrainy signed a contract for the purchase of natural gas on the border between Poland and Ukraine, Internet-based Zerkalo Nedeli (Mirror of the Week) said on Wednesday, October 31.

It said the contract begins on November 1, 2012 and ends on January 1, 2013, and envisages purchase of 56,744,640 cubic metres of gas.

Naftogaz Ukrainy was not immediately available for comment.

Ukraine can receive up to 5 billion cubic metres of natural gas from Europe annually in reverse mode and can increase this volume to 20 billion cubic metres in the future “without additional capital investments”, Ukrtransgaz Deputy Chief Engineer Oleg Mikhalevich said earlier.

“We have taken measures that allow us to receive about 5 billion cubic metres of gas in reverse mode and bring this amount to 20 billion,” Mikhalevich said.

The throughput capacity of Ukraine’s gas transportation system on the Western border is about 40 billion cubic metres.

In May 2012, Naftogaz Ukrainy signed a framework agreement with German RWE Supply & Trading on the purchase of gas. The document does not state the parties’ obligations to buy certain amounts of gas, assuming that they will sign separate agreements for that.

Earlier, Ukrainian Prime Minister Nikolai Azarov said that Kiev was considering buying natural gas in Europe, including that from Russia, claiming that it would be cheaper to do so than to buy it directly from Gazprom.

Azarov said that “Naftogaz Ukrainy was engaged in negotiations with the German energy company RWE on the import of Russian natural gas to Ukraine from Europe in reverse mode”.

In his opinion, “this will be less expensive that buy gas directly from Russia”.

The price of Russian natural gas for Ukraine is 416 U.S. dollars per 1,000 cubic metres in the first quarter of this year; 418 U.S. dollars in the second and third quarters; and 413 U.S. dollars in the fourth quarter.

The average annual price will be 415.77 U.S. dollars per 1,000 cubic metres. The Ukrainian state budget sets the price of gas at 416 U.S. dollars per 1,000 cubic

Ukraine plans to buy 10 billion cubic metres of natural gas in Europe, Naftogaz Ukrainy CEO Yevgeny Bakulin confirmed earlier.

“We are engaged in consultations on diversification of the gas market and gas purchases in Europe in the amount of 10 billion cubic metres,” Bakulin said.

“This work is at the preliminary stage,” he added.

Ukraine is also engaged in negotiations with suppliers of gas from Turkey, Romania and Germany to discuss the sale by each of them from 2 to 3.5 billion cubic metres of gas annually.

Negotiations with European suppliers were resumed after it became clear that Russia was not ready to make concessions to Ukraine on the issue of gas price reduction and is creating a gas transportation consortium.

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