Ukraine sees bright currency and gas future

Kiev - Ukraine's Prime Minister said on Thursday the local currency would gain around 30% of its value should the ex-Soviet country become energy self-sufficient as the government plans by 2020.

Volodymyr Groysman predicted a dollar would cost 18.5 Ukrainian hryvnias instead of the current 26.5 if Kiev did not need to pay hard cash to other countries for its natural gas supplies.

Kiev has frozen its relations with Moscow because of Russia's support for insurgents fighting the government in east Ukraine and currently buys its gas from central European states.

But Groysman told local media that he "recently saw analysis" showing the currency gaining substantially and inflation slowing should Ukraine be able to rely on its own natural gas supplies.

"If we add our own Ukrainian gas and stopped buying it using hard currency, the dollar would not have the problems it is currently having today," Groysman said.

A dollar could buy around eight hryvnias before a pro-EU revolution started that toppled the Russian-backed president in 2014.

The Kremlin's subsequent annexation of Ukraine's strategic Crimea peninsula and the outbreak of a pro-Russian insurgency in April 2014 that has claimed nearly 10 000 lives saw the country's currency nosedive and inflation soar.

Ukraine's gross domestic product imploded by around 17% of gross domestic product in 2014-15.

Inflation hit nearly 50% in 2015 and Ukrainians continue to voice their displeasure at the government for its seeming failure to steady the ship.

Ukraine's 2017 budget sees growth reaching three percent and inflation falling to an annual rate of a relatively modest 8.1%.

But gas has been a hex on Ukraine - especially in periods when it had to rely on petro-giant Russia.

Repeated pricing disputes saw the Kremlin's natural gas giant cut off blue fuel supplies to Ukraine twice since 2006. Moscow itself stopped buying Russian gas 13 months ago.

Ukraine has an estimated natural gas supply of 900 billion cubic metres that require Western investments to reach in full.

But fighting in the east has scared off some world energy giants and much now depends on when the war will end.

A government paper approved in December set Ukraine the target of producing 27 billion cubic metres of gas in 2020.

The state gas transport company said Ukraine produced 20.2 billion cubic metres and imported another 11.1 billion cubic metres last year.

The government has also set itself the goal of becoming more energy efficient.