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Ukraine reduces reliance on the Russian gas and imports more from Europe

Ukrainian state energy company, Naftogaz, has reduced gas imports from Russia by 30% so far in 2013 and will cut them further in 2014. At the same time imports from Europe will double, according to Ukraine’s Energy Minister Eduard Stavytsky. Imports from Europe are expected to reach 2-2.5 billion cubic meters this year, and no less than 5 billion cubic meters in 2014.

The reason behind this move is the high price of Russian gas. While the sample average price of gas supplied from Europe by German firm RWE (RWEG.DE) reached $385 per thousand cubic meters (tcm) between September 2012 and September 2013, Naftogaz paid more than $400 per tcm for gas imported from Russia.

Ukraine has long tried to negotiate a price cut with Russia, but has failed to secure any such concession. Consequently, in late 2012 the country started to replace Russian gas with cheaper gas purchased on the European spot market. It now appears that this is more than a short-term strategy and it looks like Ukraine will be sourcing gas from Europe for the foreseeable future.

Find this interesting? You may also like our ‘Industry Reports on Gas Sector’.

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