Gas prices in Ukraine: experts tell what should I prepare Ukrainians in 2020

Цены на газ в Украине: эксперты рассказали, к чему стоит готовиться украинцам в 2020 году

The experts evaluated the proposal of “Naftogaz” to sign contracts for the quarter.
In the NJSC “Naftogaz of Ukraine”, said a possible sharp rise in price of gas for household consumers in the first quarter of 2020 (depending on the results of negotiations with Russian “Gazprom”, the weather, the market situation and other factors). Moreover, Ukrainians offered a guaranteed quarterly price. Experts said the publication of “Comments” which can be the price of gas since the new year and how profitable consumers to sign contracts for the quarter.

Gas prices in Ukraine: difficult to predict
Expert on energy markets, companies, Dragon Capital Denis Sakwa admitted that to give any meaningful predictions about how may increase the price of gas in the event of a disruption, very difficult. If not impossible.

“For example, in 2018, when Gazprom suddenly refused to supply gas to “Naftogaz” has already received advance payment, the jump was four times in a few days. Then as quickly all was rolled back, – said Sakwa. Now store in Europe and in Ukraine is filled above the level of previous years. And this will smooth out the deficit. But to say that prices will grow by 50%, two times or four times – I can’t.”

Gas prices in Ukraine: it all depends on the negotiations
Expert on housing, candidate of legal Sciences Andrei Nikonchuk believes that if Ukraine and Russia agree on transit, the gas will rise somewhere by 20-25%. And just because you see the need in including in the cost of the amount of operation of Ukraine’s GTS because of the reversal of direction of gas flow in the direction from West to East. Then the cost will depend on the market value in the world market

“If agreed, everything will depend on the result of the agreement, notes Nikonchuk. In the end, regardless of the outcome agreement, there may be a third option, in which the supply of gas to the consumer in our country has long turned into an analogue of a hidden tax is a vital resource. It is impossible to refuse – and this is part of the hidden subsidies of the budget of Ukraine because of shrinking economic activity (degradation of the industry) and the emergence of large arrears to the budget.”

Gas prices in Ukraine: a sharp rise in price should not be
Political expert Valery Piece sure prerequisites for a sharp increase in gas price for household consumers no. He also believes that gas, most likely, can and should become cheaper.

“The issue of gas prices for population for heat generating companies is always important. And if the latter is still unable to cover their costs due to the increase of the tariff for services provided (warm or hot water), then with regard to domestic consumers, they have a lot more problems and always, – says the expert. – Low yield of population, high prices of other goods and services of first necessity – always put the Ukrainians in front of a choice what to pay first. And even reducing the guaranteed price of gas by 12% compared to the regulated (market) price at which Naftogaz sold gas to protected consumers in January-April of 2019 a very insignificant impact on reducing the financial burden on the family budget. Please note that, as a rule, the tariffs for heat and hot commissioning due to lower gas prices for the producers of such services remain unchanged”.

Valery Piece recalls that the guaranteed wholesale price of “Naftogaz” is fixed at RS 5500. per thousand cubic meters (without VAT, transportation costs and margins of gasbeton).

“This may partly reassure those who do use gas for heating of private housing. But such households are very few (the lion’s share of the population in the same rural countryside has long been as the primary fuel uses wood), – says the expert. – Guaranteed wholesale price (which does not require according to “Naftogaz” prepaid) can be used to predict the family budget. Those who default will agree with this option (this is what is underlying) and will receive a fixed price until the end of the heating season”.

But in terms of negotiations on Russian gas supplies (this is not explicitly mentioned in Paris on 9 December) Ukraine has all chances to get gas cheaper than that which is pumped in summer, underground storage facilities, says the Piece. And recalls that the total gas reserves at the beginning of the heating season made up 21.74 billion cubic meters when you need to pass the winter at least 20 billion cubic meters of gas.

“And it is important to the price of imported gas, given it was a warm winter 2018-2019 year in Europe, partly his “contribution” to the dumping made the USA, – the expert continues. For example, the average price of imported gas in January was about 315 dollars. per thousand cubic meters, in February 2019 290 USD. But in November this figure was just over 170 dollars. And by the end of the year we can talk about the weighted average price. I think that it will oscillate in the context of 200-250 dollars. per thousand. Will wait for the official reports. If Russia will provide beneficial for Ukraine’s gas prices and it is less “European” the prerequisites for the rise of “Naftogaz” of gas prices for Ukrainian consumers will not and Naftogaz need to think about how to get rid of (READ: GUARANTEED PRICE) to the population cheap European gas and still make money, and to extinguish the debt on Eurobonds (for the purchase of additional volumes of gas “Naftogaz of Ukraine” issued Eurobonds totaling USD 1 billion.). Moreover – you will need to explain why the price drops further (the requirement the President has repeatedly). Therefore, there is a term “guaranteed price” and horror stories about the sharp rise in price of gas”.

Valery Piece believes that “must now head ache” “Naftogaz”, not Ukrainian consumers.

“The only question is, how much cynicism in the minds of those and will not do again the scapegoats of ordinary citizens”, – the expert concludes.

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