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With freezing temperatures gripping Kiev, Ukraine's state energy firm Naftogaz said on Friday it had transferred $378 million to Russia's Gazprom to buy Russian gas for December, paving the way for the first shipments since Moscow cut supplies in June.
Flows to Ukraine from Russia were severed in a dispute over prices and debts. In line with a deal signed by Naftogaz and Gazprom in October, they should resume within 48 hours from when the Russian firm receives the transfer.
Cash-strapped Kiev had delayed buying new supplies, but increasingly cold weather has forced it to draw down on severely depleted reserves.
Naftogaz did not say how much gas it planned to buy, but earlier the energy ministry said this could be about 1 billion cubic meters.
Ukraine, a former Soviet republic, is one of the largest consumers of Russian gas with annual imports of around 30 billion cubic meters.
It is also the major route for Russian gas transit to Europe with Russia pumping around half of its gas exports through Ukrainian pipelines to prime markets there.
Ukraine and Russia signed an agreement, brokered by the European Commission, at the end of October to cover gas supplies over the winter months as a temporary solution to a long-standing price dispute.
Russia, whose relations with Ukraine are politically complicated by its support for a separatist rebellion in Ukraine's east, had insisted Kiev pay for supplies in advance.
Since the start of the heating season in late October, reserves have fallen 17 percent to 13.9 billion cubic meters as of Dec. 1, according to data from Ukrtransgaz, the state-run gas transport monopoly.
Ukraine's energy ministry has said Kiev might buy an additional 1.5 bcm of gas in the first quarter of next year.
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Ukraine Pays $378M for Russian Gas Thanks to Freezing Weather
Ukraine said it transferred $378 million to Russia as an upfront payment for natural gas, money that should allow shipments interrupted for the past five months to resume.
NAK Naftogaz Ukrainy sent OAO Gazprom the money for 1 billion cubic meters, previously scheduled for import this month, the Ukrainian energy company said in an e-mailed statement today. Gazprom Chief Executive Officer Alexey Miller said on Oct. 31 that gas shipments to Ukraine would resume within 48 hours upon receipt of payment. Sergei Kupriyanov, a spokesman for Gazprom, had no immediate comment when reached by phone today.
Once Ukraines main gas supplier, Russia stopped deliveries June 16 over a price and debt dispute after the countries relations soured over annexation of Crimea and unrest in eastern Ukraine. The European Union, which relies on Russian gas piped through Ukraine for 15 percent of its needs, brokered an interim deal between the states in October to resume supplies and avoid shortages seen in 2006 and 2009.
Russian gas paid for today cuts the risk of shortages in Ukraine and in Europe-bound transit at least until the middle of February, said Alexander Paraschiy, an analyst at Concorde Capital in Kiev. The country may need 3 billion to 4 billion cubic meters of gas from Gazprom at cost of as much as $1.5 billion starting in January to last through the heating season given rising demand and problems with coal, Paraschiy said by phone.
The payment deal, which set a fixed discount and debt-restructuring conditions, covers Gazprom deliveries through March. Ukraine agreed to pay out $3.1 billion of its gas debt by the end of the year, transferring a first installment of $1.45 billion last month.
Ukraine has been cutting gas consumption, boosting imports from the EU and using fuel from its underground storage sites to cope without Russian fuel.
Supplies could be halted again on Jan. 1 if Ukraine doesnt pay out the agreed debt, Russian Energy Minister Alexander Novak said in October.
To contact the reporter on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net
To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Ana Monteiro, Tina Davis
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