Companies from Eni SpA to Uniper SE will see combined gas shipments to the east European nation fall by about that amount after a Stockholm court ordered Ukraine to resume some imports from Russia after a break of more than two years. European Union companies first started selling gas to Ukraine in 2013, with the new market helping offset a slump in domestic demand at the time, according to Bloomberg.
“The party is getting less exciting for the European gas traders and pipeline operators, who benefited from re-exporting Russian gas to Ukraine,” BI analyst Elchin Mammadov said. Yet, a recent recovery in EU gas consumption “will soften the blow.”
Ukraine imported 14 billion cubic meters of gas from the EU last year, comparable to Belgium’s annual consumption. From this year, state-owned NAK Naftogaz Ukrainy should import 5 billion cubic meters annually under its contract with Russia’s Gazprom PJSC through 2019, and has to pay for at least 80 percent of that, according to the court.
That volume is worth as much as $1.2 billion per year, assuming 5 billion cubic meters is supplied at the average price Ukraine paid for imports last October, according to the most recent data from its statistics service. The court linked the price to be paid to Russia for gas to German hub rates, Naftogaz said without elaborating.
France’s Engie SA was among Ukraine’s top suppliers in 2016 with a volume of more than 3 billion cubic meters. That was “a record year,” while sales last year decreased by about 40 percent because of stronger competition, the company’s press service said by email.
“With Naftogaz potentially buying Russian gas in 2018 and 2019, Engie is enhancing its strategy of selling in Ukraine to final industrial customers that was started last year,” it said.
Swiss-based Axpo Trading AG, another major supplier, “is in the process of establishing a local Ukrainian company to be able to trade directly within Ukraine,” its press service said.
Gazprom is ready to resume supplies to Ukraine once all debts are paid and on the condition that deliveries are paid for in advance, Alexander Medvedev, the company’s deputy head, said last month. That position remains in place, Gazprom’s press service said Wednesday.