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One of Europe’s biggest energy headaches may be finding relief as Ukraine moves to import less gas from Russia and more from the European Union through Slovakia.
Ukraine’s state-run Ukrtransgaz reports that, in the past week, the country’s balance of imports has shifted substantially. It said Ukraine imported 42.303 million cubic meters of Russian gas on Nov. 7, 24.097 million cubic meters on Nov. 8 and only 10.069 million cubic meters on Nov. 9.
Meanwhile the energy transport operator Eustream in Slovakia reports a rise in Ukrainian imports from the EU: 20.662 million cubic meters of gas on Nov. 8, 22.977 million cubic meters on Nov. 9 and 27.07 million cubic meters on Nov. 10.
Andriy Kobolev, the CEO of Ukraine’s state-owned gas company Naftogaz, said last month that his country will buy gas from Gazprom, Russia’s gas monopoly, only when necessary and affordable.
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“When we see that market conditions are favorable, we will buy,” he said. “If we believe that the price will go down, why buy something now that will be cheaper in a week?”
On Oct. 31, Ukraine completed its purchases of 2 billion cubic meters of gas from Gazprom at a rate of $227 per 1,000 cubic meters. Since then, the amount of gas imported from Russia has declined threefold, and Naftogaz has paid $64 million in advance to Gazprom to ensure that these reduced supplies aren’t interrupted.
Kobolev said he anticipates that Gazprom will soon announce the asking price for its gas to be sold during the first quarter of 2016. He stressed that the 2015 price of $226 per 1,000 cubic meters could apply only through Dec. 31, and must be lower next year.
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In the meantime, Kobolev said, he expects the price of gas from the EU to be lower as well. The average price of both EU and Russian gas imported to Ukraine in the third quarter of 2015 fell by $2 from the previous quarter to $226 per 1,000 cubic meters.
There are several independent traders that have been importing gas from EU members Hungary, Poland and Slovakia, according to the Association of Gas Traders of Ukraine. Some, including Energy Resources of Ukraine and Ukraine Energy, import the gas for resale. Others, including ArcelorMittal of Luxembourg and the energy company DTEK of Donetsk, Ukraine, import it for their own uses.
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Igor Liski, the owner of Ukraine Energy, says that when the company began importing fuel through Slovakia in April, it was meant solely for its Zhytomyr Cardboard Factory. Later, though, the factory switched to other sources of energy, but Ukraine Energy kept buying the EU gas to resell it on the open market in Ukraine. He says he plans to import 100 million cubic meters of EU gas in 2016.
Besides ArcelorMittal of Luxembourg, other companies based outside Ukraine are either now importing gas into Ukraine or are considering doing so. They include Axpo of Switzerland, ENGIE of France, RWE of Germany and TrailStone of the United States, according to ICIS, the energy and chemical news organization.
By Andy Tully of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com