The price for national gas purchased by Naftogaz Ukrainy from OJSC Gazprom will come to $205-$210 per 1,000 cubic meters in the fourth quarter, up from 198 in the third quarter, said Anatoly Podmyshalsky, head of Gazprom's division for operations in the near-abroad and the director of Gazprom Sales Ukraine.
“Some time in the fourth quarter the price will come to $205-$210 per 1,000 cubic meters,” he told journalists in Kyiv on the sidelines of the Russo-Ukrainian business forum.
Podmyshalsky added that Naftogaz had confirmed to Gazprom its plans to acquire 32 billion cubic meters of natural gas in 2009, which is the minimum amount of purchase stipulated in a contract signed by the two companies on January 19.
“They [Naftogaz] gave us an application for 14 bcm in the fourth quarter, but according to the balance it is 12.5 bcm. 14 bcm was provided in the calculation so that [the final amount] would be 32 bcm for the year,” Podmyshalsky said.
He said that in the first eight months of 2009, Naftogaz has received 14.8 bcm of natural gas from Gazprom.
The gas contracts signed in January for the period until 2019 spell out the cost of gas and its transit. According to the contract formula, prices are changed assuming the oil price with a nine-month lag. After oil prices reached a historical maximum in the summer of 2008 at around $140 a barrel, prices collapsed to $40 a barrel in December 2008-January 2009 owing to the world economic crisis. However, since that time oil prices have gone into recovery. Oil prices have held recently at around $70 per barrel on the world market.
The new contract for gas purchases also contains “take and pay” terms. According to the contract, Naftogaz should acquire at least 80% of the contracted amount of natural gas, which, including the figures contained in the contract, means that the company would have to purchase at least 32 bcm this year. Starting from next year, the company should acquire at least 41.6 bcm.
In the first half of the year, Naftogas was in breach of the delivery contract practically every month since monthly selections were lower than stipulated. Experts have said that the Ukrainian company wants to wait for gas prices to decrease in the second half.
The contract foresees the supply of 5 bcm in the first quarter, 10 bcm in the second, 12 bcm in third and 12.5 bcm in the fourth. However, Naftogas imported only 2.8 bcm in the first quarter and around 5.7 bcm in the second quarter. This situation formally gives Gazprom the right to present fines to Naftogaz, which Ukrainian President Viktor Yuschenko has estimated at $5.25 billion.
In the third quarter, Naftogaz imported up to 3.3 bcm a month. Factoring in this until the end of the year, the company should buy an additional 16.9 bcm, or 4.2 bcm a month.
