2019
June began with a sharp drop in natural gas prices in Ukraine. At the beginning of the month, prices ranged from 6 350 – 6 500 UAH/thousand m3 depending on the resource. During the first week, prices tended to rise, and towards the end of the first ten days they stood at 6 400 – 6 600 UAH/thousand m3.
From 10 June, gas prices on the market began to fall, and the decline continued until the end of the month. In the last days of June, gas prices in Ukraine ranged from 5 350 – 5 500 UAH/thousand m3. Overall, during the reporting month the June resource lost about 1 000 UAH/thousand m3 in price.
The main reason for the decline in gas prices in Ukraine is the fall in prices on European gas markets. In June, the lowest spot gas prices in the last three years were recorded at European hubs: at the beginning of the month they ranged from €8,9 – 13,7/MWh. The main reasons for the price decline remain the gas surplus in Europe, record-high filling of underground gas storage facilities (UGS), stable LNG supplies from Russia, Qatar, the USA and other countries, as well as warm weather.
During the first week of the month prices rose, and throughout the first half of June they were relatively stable at €9,5 – 14,5/MWh. As the end of the month approached, prices in Europe began to decline, and by the end of June spot prices at the hubs ranged from €7,8 – 11,9/MWh.
In the first half of the month, most production companies in Ukraine still hoped for gas prices to rise, so they did not trade it but injected it into UGS; however, from mid-June, when the downward price trend became clear, production companies joined traders and importers and started selling gas.
At the beginning of June, gas trading activity on the market was lower than at the end of May, but from the second ten-day period activity increased and remained at a relatively high level.
The price offers of NJSC «Naftogaz of Ukraine» for industrial consumers not covered by the PSO were 6 963,6 UAH/thousand m3 on prepayment terms and 7 707,6 UAH/thousand m3 on other payment terms for June, which is about 600 UAH lower than in May. At the end of June, «Naftogaz» published its offers for July, in which the company cut prices by almost another 1 000 UAH. For July, «Naftogaz» prices are 6 020 UAH/thousand m3 on prepayment terms and 6 727 UAH/thousand m3 on other payment terms.
Gas imports from European directions in June 2019 reached a record 1,66 billion m3, which is 120 million more than in May 2019 and 600 million, or 35,5%, more than in June 2018.
During the month, Ukraine continued to actively prepare for the 2019 – 2020 heating season by injecting gas into underground storage facilities. In June, 2,156 billion m3 was injected into UGS, with an average daily injection of 72 million m3. Thus, at the end of the month, Ukrainian UGS held over 13,5 billion m3.
«Ukrtransgaz» is also actively cooperating with European non-residents who store gas in Ukrainian UGS under the «customs warehouse» regime. As of the beginning of July, foreign companies store 840 million m3 of gas, compared to 515 million m3 at the beginning of June.
Gas consumption in Ukraine in June amounted to 1,2 billion m3, which is 177 million m3 less than in May. Average daily gas consumption in June is 40 million m3.
The estimated marginal prices of «Ukrtransgaz» for June 2019, used to calculate financial security, are:
- marginal purchase price of natural gas — 8 356,6 UAH/ thousand m3 (incl. VAT);
- marginal selling price of natural gas — 6 837,22 UAH/thousand m3 (incl. VAT).
- marginal purchase price of natural gas — 6 218,97 UAH/ thousand m3 (incl. VAT);
- marginal selling price of natural gas — 5 088,25 UAH/thousand m3 (incl. VAT).
- for natural gas storage services in UGS — 0,1720 UAH/thousand m3 per day (excl. VAT), the tariff remains stable;
- for natural gas injection services into UGS — 93,30 UAH/thousand m3 per day (excl. VAT), the tariff will increase by 45%, or 28,9 UAH/thousand m3;
- for natural gas withdrawal services from UGS — 97,20 UAH/thousand m3 per day (excl. VAT), the tariff will increase by 45%, or 30,1 UAH/thousand m3.
The natural gas purchase price formed during June 2019 is 5 653,61 UAH, which is about 2 200 UAH/thousand m3 lower than the price in May. The estimated marginal prices for July 2019, used to calculate financial security, are:
At the end of June, the National Energy and Utilities Regulatory Commission (NEURC) adopted a resolution to increase tariffs for natural gas injection into and withdrawal from UGS. The new tariffs will be:
The new tariffs will take effect on 1 August 2019. As a reminder, «Ukrtransgaz» previously reported a funding shortfall due to economically unjustified tariffs for balancing services.
