BOFIT Weekly Review 2015/42
Russia restarts gas deliveries to Ukraine; air travel between the two countries set to end
Having received from Naftogaz a $230 million advance payment for next winter’s gas, Gazprom this week again began to supply gas to Ukraine after an interruption of a few months. In earlier negotiations involving Russia, Ukraine and the EU, a gas price of $227 per 1,000 cubic metres was set to extend through end-March 2016. The price is about the same as the average price of exported Russian gas in April-June.
For the winter season 2014-15, Ukraine purchased a total of 1.5 billion m3 of gas from Gazprom for just over $500 million. The contract price for gas last winter was $380 per 1,000 m3, reflecting higher oil prices. Ukraine bought only a tenth of its typical winter gas purchase from Gazprom last year, but increased substantially its gas imports from Europe. The imports from Europe, of course, largely consisted of gas originating in Russia. Ukraine’s total gas imports last winter amounted to almost 8 billion m3 and were valued at about $2.5 billion. Gas consumption in Ukraine in the first nine months of this year contracted by about 20 % y-o-y.
Air traffic between Russia and Ukraine seems set to end. Ukraine has banned flights of Russian airlines into the country as part of sanctions it decided to impose on Russian companies and individuals. Russia has responded by imposing a similar ban on Ukrainian airlines. Both bans are set to go into effect on October 25.
Breakdown of Ukraine gas supplies, 2013-14
Source: Naftogaz of Ukraine.