Moscow, Russia gas deal cutting it thin | Fin24
  • Credit Rating

    'I think Moody's will be happy' - President Ramaphosa says plan to deal with Eskom's debt is imminent.

  • 'No Basis in Fact'

    The PIC commission has slammed Iqbal Survé’s claims about Minister Pravin Gordhan.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.


Moscow, Russia gas deal cutting it thin

Oct 20 2014 18:45

Electricity pylons. (Nardus Engelbrecht, Sapa)

London - An interim natural gas deal by Moscow and Kiev, reached over the weekend, could supply just enough to get Ukraine through the winter as long as the weather does not become unusually cold, Reuters research shows.

Russia, Ukraine and the European Commission moved towards an agreement in late September and made further progress at the weekend.

The deal is expected to be finalised at meetings between officials in Brussels on Tuesday.

Russia cut off gas supply to Ukraine in mid-June following more than two years of disagreement over the price and after relations between the two countries deteriorated over Moscow's annexation of Crimea and fighting in the east of Ukraine.

Not all details of the agreement are known, but below is a summary of the main points.


Russia is likely to deliver 5 billion cubic metres (bcm) of gas by the end of March, which should just be enough to meet demand.

Ukraine's annual gas use is typically around 50 bcm, although this figure varies depending on weather conditions and economic output.

Accessing all available sources, Ukraine is likely to have access to 42-53 bcm of gas to meet its annual demand.

Over half of its consumption is usually provided by Russia, and Moscow probably delivered 5 to 10 bcm between January and June this year before stopping supplies.

Ukraine's gas storage sites are currently filled to an average of 52.5%, equivalent to 16.8 bcm.
It also has domestic production, though the loss of gas-producing Crimea means its output will be much lower this year than its usual figure of over 20 bcm.

Analysts say 5-6 bcm could come from EU countries by the end of the year.

That brings Ukraine's accessible gas to 42-53 bcm, which should be enough to meet its annual demand, barring a spell of colder-than-usual winter temperatures or unforeseen supply outages.

Price and debts payments

Ukraine will pay $385 per 1000 cubic metres of gas for the winter period lasting until March 31 2015.

The price for Russia's gas over the following summer period will fall to $325 per 1000 cubic metres.

That is roughly in line with what most western European utilities pay for imported gas from Russia.

Russia says that Ukraine owes it around $5bn in unpaid bills for gas supplied at the end of 2013 and in 2014.

Kiev has said it will be prepared to repay Russia $2-$3bn by the end of the year, if the remaining figure could be negotiated later.

Ukrainian state-run energy firm Naftogaz and Russian state-controlled gas firm Gazprom have both lodged cases with the Stockholm arbitration tribunal to review their gas transit contracts.

All debt payments, on which Russia has been insisting, will be made only after a verdict from the International Court of Arbitration in Stockholm.

gazprom  |  russia  |  ukraine  |  gas


Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot


Struggling power utility Eskom will take centre stage at this year's mini budget

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote