Naftogaz: Ukraine's gas transit revenues shielded from gas price slump

Kiev, April 23 - Neftegaz.RU. The fall in European gas prices is not impacting Ukraine's gas transit revenues thanks to the agreement reached in December last year with Gazprom that includes a fixed transit tariff, Naftogaz chief commercial officer Yuriy Vitrenko said, S&P Platts reported.

European gas prices have dropped sharply in recent months due to the combination of an oversupplied market and weak demand. In the previous 10-year gas agreement between Gazprom and Naftogaz that ran from 2009 to end-2019, the transit fee charged by Ukraine was partly linked to the prevailing gas price.

However, the 5-year contract to 2024 agreed by the 2 sides on December 30 is for a fixed transit tariff, regardless of the gas price.

"Gas prices in Europe have fallen sharply, but the gas transit tariff that Gazprom pays us is not lower because it is fixed in the new contract," Vitrenko wrote on Facebook. "In the previous contract, part of the tariff was tied to the price of gas, therefore the tariff decreased with gas prices," he said. "The new contract is beneficial for Ukraine from that perspective."

Vitrenko said that Ukraine was at the same time also benefiting from the lower gas price as it meant a lower price to pay for the fuel gas it uses to transit Russian gas.

Gazprom sold to Ukraine some 2.7 Bcm of technical gas last year for use in guaranteeing transit, according to the company's official sales data. Vitrenko said the lower gas prices in Europe meant Gazprom's profit was falling as its gas sales revenues were lower but its transit costs were not.