Ukraine’s government has agreed on a new price for natural gas of USD 220 per tcm to USD 230 tcm, according to Ekonomichiskie Izvestia.
The revised gas agreement with Russia should be signed by the end of November or beginning of December.
Currently, the Ukrainian and Russian governments, along with Naftogaz of Ukraine and Gazprom, are drafting technical details of the new agreement. Concessions that Ukraine was required to make included, among others, gas payments in rubbles and preferential treatment of Russian companies during the upcoming privatization.
The price for imported natural gas from Russia increased to USD 400 tcm in 4Q11 from USD 355 in 3Q11.
Phoenix Capital said that the news is positive for Ukraine economy.
It said “Revision of the imported natural gas price to USD 230 per tcm to USD 220 per tcm would reduce Ukraine’s annual gas bill by USD 5 billion in 2012, assuming Ukraine would buy 31 bcm. As a direct result of lower gas prices the country will record a lower current account deficit in 2012, thereby improving macroeconomic stability and supporting the hryvnia’s exchange rate. Rising costs of natural gas amid global financial turmoil exposed Ukraine to default risks and dragged down the central bank’s international reserves. In 9M11 Ukraine’s CA deficit surged 10.9x to USD 5.5 billion. In 2011 the CA shortage will reach USD 7.9 billion or 4.9% of GDP. Payments for imported natural gas in 8M11 amounted to USD 9.3 billion and are expected to reach USD 12 billion in 2011. In addition, new gas prices will eliminate the payment deficit of the state gas monopoly Naftogaz of Ukraine. Also, we expect that the Ukrainian government will be able to make progress in negotiations with the IMF regarding the next credit tranche after the new gas agreement is finalized. The revised agreement boosts Ukraine’s creditworthiness and brightens its outlook on sovereign debt.”
