Naftogaz repays its 1Q14 gas debt, wants revised price for 4Q13 and 2Q14

The third meeting to resolve the Ukrainian-Russian natural gas dispute, held in Berlin on May 30, brought some progress, according to the May 30 statement of EU Energy Commissioner Günther Oettinger. According to his release, the Ukrainian side has repaid USD 786 mln to Russia as part of its 1Q14 debt for gas, and as soon this payment will be credited to the Gazprom account, a new round of negotiations will start as early as June 2. At the fourth meeting, which may be held today in Brussels, the energy minsters of Ukraine, Russia and the EU will try to agree on some interim price for Russian gas that has been supplied to Ukraine since the start of 2Q14.

 

At a press conference after the Berlin meeting, Ukrainian Energy Minister Yuriy Prodan told journalists that Ukraine only recognizes the part of debt to Russia for the gas that was purchased in 1Q14 (at USD 269/tcm), while the price for gas that was supplied back in 2013 (at a price of about USD 380/tcm) is contestable. Ukraine’s total debt for gas supplied in 2013 is about USD 1.5 bln. Russian Energy Minister Alexander Novak responded that Russian side does not agree with that position, according to the Interfax news agency.

 

Ukrainian natural gas monopoly Naftogaz (NAFTO) reported on May 30 it paid USD 786 mln to Gazprom for gas imported in February-March 2014. With this payment, Naftogaz claims it has fully repaid its debt for gas in 1Q14. The gas bill for January 2014 was repaid by Naftogaz back in March. This morning, Russian Energy Ministry confirmed the payment, according to Interfax.

 

Gazprom also confirmed the payment this morning, and CEO Alexey Miller reported to Interfax that Gazprom has decided to postpone switching to a prepayment regime for Naftogaz from today to June 9. By that time, Ukraine will have to repay the rest of debt for gas supplied before April 2014 (USD 1.45 bln, we estimate) and start repaying its debt for gas imported in April and May.

 

Alexander Paraschiy: We found no signs that confirm any progress in the gas negotiations from examining the statements of all the parties involved in the May 30 meeting. The fact that Ukraine made some payment (which happened before the meeting) was the only positive news of the day. But that seems to be the only concession that Ukraine is ready to offer. Apparently at the meeting, the Ukrainian side only escalated the dispute by stating it does not recognize the USD 1.45 bln portion (for gas it imported from Russia in 4Q13) of the total USD 2.24 bln debt for imports in 4Q13 and 1Q14.

 

Before Prodan’s statement, Russia and the EU were sure that it was the USD 2.24 bln debt that was not contestable. We see a low probability that progress in gas pricing will be reached at today’s possible meeting, and we expect that a new meeting(s) on this issue will be scheduled for later this week.

 

Meanwhile, Ukraine has accumulated 11.76 bcm of gas in its storage facilities as of May 30, thus raising its stockpile by 3.24 bcm during May. This amount is 4.3 bcm (57%) higher yoy, according to our estimates, and it indicates Ukraine is ready for a long interruption in gas supplies from Russia. We estimate Ukraine can easily survive without importing Russian gas until late October 2014. To secure uninterrupted supplies of Russian gas to Europe, Ukraine will have to accumulate about 18 bcm of gas by mid-October, which it can do by starting to import Russian gas in mid-September.

Источник: Конкорд Капитал