Russia discounts gas delivery price to Ukraine

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Russian Prime Minister Dmitry Medvedev has agreed to cut down the price of natural gas to Ukraine in a bid to bring Russian gas prices closer to European market rates.

Russia discounts gas delivery price to Ukraine

According to a notice, Russia will discount its previous gas price of $230 per 1,000 cubic meters (TCM) by $17.8, bringing it to $212.2 per TCM, an official Russian government notice said January 1.

Ukraine’s Energy Minister Volodymyr Demchyshyn previously said Ukraine was ready to buy Russian gas in the first quarter of 2016 if the price was reduced to under $200 per TCM. Ukraine halted gas purchases from Russia’s top producer Gazprom in July 2015 after Kiev and Moscow failed to reach a deal on gas deliveries for the third quarter of the year. Kiev has since been importing gas via reverse flows from the EU, mainly from Slovakia.

Currently, gas is trading at a price of around $170 per TCM in European markets.

“Russians understand that in order to be competitive they need to decrease the price,” Medvedev said, noting that the discount was intended to reflect “market conditions.”

Ukraine, which has around 5 bcm of gas in underground storage, needs to have stored 19 bcm of gas to protect its own supply in winter as well as to ensure there are no halt to the transit of Russian gas across the country to Europe.

The EU receives about 40% of its Russian gas imports via Ukraine.

Russia’s 2015 gas production reached 635.349 billion cubic meters (bcm), down 1.0% year-on-year.

In December alone, Russia produced 63.309 bcm of gas.

Written by Yoana Manoilova for South Front

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