The main exporter of natural gas to Ukraine is Russia. The Russian company supplying gas is Gazprom, the buyer company is Naftogaz. The current contract between these companies was concluded in 2009 for a period of 10 years.
History of the 2009 gas agreement between Russia and Ukraine
In January 2009, a new gas crisis arose in relations between the Russian Federation and Ukraine. Gazprom suspends gas supplies to Naftagaz, as a new contract between the countries has not been signed. In mid-January, Russia was forced to stop deliveries of transit gas through the territory of Ukraine to European countries, as Ukraine began to illegally pump it out for its own needs. Many European states have faced problems in providing industrial and household enterprises with natural gas.
On January 19, 2009, the conflict in the field of gas relations between the countries was resolved, an agreement was signed on the supply of gas to the territory of Ukraine. It spelled out a specific form for calculating the price of gas, which was equated to prices for the Italian market.
When the agreement was signed, oil prices on the world marketwere about $45 per barrel, but by the end of 2009 prices rose to $75. As a result, the gas price for Kyiv has increased.
History of gas relations between countries in 2015
Since July 1, 2015, a new round of gas tension between countries has arisen. Ukraine refuses to purchase gas from Russia, as it is not satisfied with the purchase price of $247 per 1,000 m3.
At the end of September, negotiations were held between the energy ministers of the two countries with the participation of Maros Sefcovic, Vice President of the European Commission. As a result of these negotiations, agreements were reached on the conditions for the export of Russian gas to Ukraine and the price for fuel, which in 2015 amounted to $232 per 1,000 m3.
On October 12, Gazprom restored gas supplies to Ukraine, having received an advance payment of $234 million.
But on November 25, Russia suspends gas supplies to Ukraine without receiving an advance payment from Kyiv. Ukraine considers the price offered by Russia of $212 per 1000 m3 as too high and does not transfer the prepayment for fuel.
Change in the volume of natural gas exports by years from Russia to Ukraine
In 2000, the volume of gas supplies to Ukraine from Russia amounted to 27 billion m3, in 2006 the volumes increase to 55 billion m3, in 2007 - 54 billion m3, in 2008 - 47 billion m3, in 2009 - 38 billion m3 , in 2010 – 37 billion m3, in 2011 – 40 billion m3, in 2012 – 33 billion m 3, in 2013 – 26 billion m3.
Prices for gas supplied from Russia to Ukraine (price per 1,000 m3)
From 2006 to 2013, gas prices for Ukraine were gradually rising. This is due to rising prices in the world energy market. Thus, the price of gas in 2006 was $95, in 2007 it reached $130, in 2008 - $179.5, in 2009 - $259, in 2010 - $260.7, in 2011 - $309, in 2012 - $426, 2013 - $413.5.
Because of the high price of gas, the Ukrainian government is trying to reduce its consumption. So, in 2012, Ukraine bought 33 billion m3, in 2013 – 26 billion m3, and according to the contract, it had to purchase 52 billion m 3 fuel per year.
At the beginning of 2014, Ukraine receives a discount, the price was $268.5 per thousand m3.
Gas tariffs for the population of Ukraine in 2015
In 2015, a memorandum was signed between Ukraine and the IMF on issuing loans to Ukraine, according to which conditions were set for raising utility tariffs for the population. The Government of Ukraine has drawn up a phased price increase plan.
The first stage began to be implemented from April 1, 2015, 2 types of gas prices for the population were introduced:
- Preferential - operated during the heating season and with consumption less than 200 m3 per month, amounted to UAH 3600 for 1000 m3.
- Market - operated with gas consumption over 200 m3 and amounted to UAH 7188 for 1000 m3.
During this period, gas tariffs corresponded to 50%from its market value. The next stage of price increases was to bring fuel tariffs to 75% of the market price.
It was impossible to keep gas tariffs for the population of Ukraine at the same level. They did not cover the costs of enterprises for the supply of fuel. The discrepancy between market prices and funds received for the provision of natural gas to the population led to the bankruptcy of enterprises.
According to the agreements with the Navy, the gas price for consumers should correspond to the market price, and the next stage of tariff reform began in May 2016:
- Preferential prices for the population that were in effect during the heating season have been cancelled.
- Prices have been equalized for consumers and businesses. The tariff was UAH 6879 for 1000 m3.
- The consumption limit of 1200 m3 was applied during the heating period. When the volume of consumption was exceeded, the price of gas was 100% of the market value.
Gas tariffs for Ukrainians in 2017
The Naftogaz company proposed to introduce a tariff of UAH 7,604 per 1,000 m3, including VAT and transportation costs. But at present, this initiative has not been approved, and the price of fuel has remained the same. In 2017, the gas tariff for all consumers is UAH 6879 per 1000 m3.
