Naftogaz repays USD 400 mln loan, speeds up Gazprom repayments

Макроэкономика 08.11.2013 Naftogaz of Ukraine (NAFTO), the state natural gas producer and distributor, has repaid its USD 400 mln debt (matured in mid-October) to VTB Capital, Forbes.ua reported on November 7, referring to a statement by Vice Prime Minister Yuriy Boyko. In other news, Energy Minister Eduard Stavytskiy reported that Naftogaz’s remaining debt to Gazprom (for its August gas supplies) amounted to USD 706 mln as of mid-November 7. This is 80% of Gazprom’s total claim for August (USD 882 mln), implying that Naftogaz repaid about USD 100 mln over that day, or the same amount that was paid during the whole previous week. The energy minister also pointed out that the August purchase of gas was made mainly to fill Ukraine’s gas storage facilities and ensure smooth supplies of Russian gas to Europe during the peak period of winter 2013/14. Boyko developed this idea, stating that Ukraine is not obliged to pump Russian gas into storage, so it will avoid doing this in case Gazprom “will use such a formal approach” (i.e. demanding quick repayment for August gas and threatening to start demanding prepayment for all gas supplied to Ukraine). Meanwhile, Gazprom spokesman Sergei Kupriyanov announced a bill to Naftogaz for October gas supplies: USD 1.355 bln, payable by the end of November 7. Alexander Paraschiy: The news on banking debt repayment looks encouraging for holders of Naftogaz debt paper as it demonstrates the entity is doing its best to repay its loans, even at the cost of raising payables for gas. Yet Naftogaz increasing its pace of repaying its August debt to Gazprom looks worrying to those exposed to any UAH-denominated papers, as it suggests foreign currency is flowing out of Ukraine too fast this month thus creating additional pressure on the hryvnia. At the same time, Boyko’s tough position on “formal approach” suggests there is little chance that Gazprom will penalize Naftogaz by demanding prepayment for Russian gas. Moreover, Boyko’s arguments can be used by Ukraine (Naftogaz) to bargain for a payment delay for the remainder of the August payables for gas, and possibly for October supplies.