Updated: Ukraine Pushes for Russian Gas Agreement to End of 2016 Heating Season

Ukraine expects to sign an agreement for Russian gas supplies for the next 12 months during the negotiations with Russia to be brokered by the European Union on 13-14 April.

In his briefing on Wednesday, the Minister of Energy and Coal Industry of Ukraine Volodymyr Demchyshyn said that Ukraine’s gas needs are met despite the end of the “winter package.” 

“In the last week we have taken up to 10 million cubic meters per day from storage facilities. We received … about 40-45 million from Europe, and slightly less than 10 million from Russia. Under these conditions and given stocks of more than 7.7 billion cubic meters, this is a balanced situation” Demchyshyn said in a note released by the Ministry of Energy.

According to Demchyshyn, the price of Russian gas could fall even more, touching $220 per thousand cubic metres in the third quarter. The Ukrainian minister said that $250 per Tcm would be the current fair price. Kiev is now paying $329 per Tcm for gas imported directly from Russia. 

A few hours before, Russia agreed to extend the pricing policy for gas exports to Ukraine. During a meeting on Tuesday evening, Russian President Vladimir Putin and Prime Minister Dmitry Medvedev decided to stick to the current situation.

“We can extend the current conditions for three more months with the understanding that the ultimate gas price for our consumers abroad is, one way or another, connected to oil prices. And oil prices in the global market are quite volatile, so we will need to see what is happening in this area in three months and then make subsequent decisions” Putin told Medvedev.

Naftogaz later confirmed that it had signed with Gazprom, a technical addendum to their gas supply contract, extending key elements of the Brussels agreement (so-called “winter package”) until the end of June 2015. The Ukrainian company said that the pricing mechanism, payment regime and principle of a flexible ordering schedule had been extended. The price of Gazprom gas for Ukrainian consumers in the second quarter of 2015 is estimated at $248 per thousand cubic meters.