Ukrainian Naftogaz and RWE Sign New Agreement

KYIV, Urkaine, September 11, 2013 /PRNewswire/ --

A new agreement between German electric utilities company RWE and Ukrainian state oil and gas managing company Naftogaz has been signed on September 5, 2013, informed Eduard Stavytskyi, Minister of Energy and Coal Industry of Ukraine, as quoted by rbc.ua. The newly signed document regulates both gas supply to Ukraine and gas storage in the Ukrainian underground facilities, reports Unian.

The cooperation with a German partner is part of Ukraine's effort to diversify its gas import and strengthen national and European energy security as Ukraine is not only buying the majority of its imported gas from Russia, but is also the transit country for Russian gas traveling to Europe.

Ukraine signed a framework agreement with RWE regarding the supply of gas to the Eastern European country in May 2012. The company agreed to sell Ukraine up to 5 billion cubic meters of gas annually. By the end of 2012, RWE has sold Ukraine 56 million cubic meters of gas.

Ukraine seeks to negotiate a discount for the gas it buys from its northern neighbor, as Russian gas comes to Ukraine at USD 406 per thousand cubic meters (first quarter of 2013). According to the Prime Minister of Ukraine Mykola Azarov, the gas bought from RWE is USD 100 cheaper than the Russian product.

At this time, Ukraine's diversification efforts include efforts to arrange gas supply from Slovakia and Romania. Test gas deliveries from Slovakia took place in May of 2013. In October of 2013, Ukraine plans to sign an agreement regarding gas supply from Romania, according to Stavytskyi.

Additionally, Ukraine arranged gas supply through Poland and Hungary. By September 2013, Ukraine hoped to increase gas supply from Hungary up to 15 million cubic meters per day. Overall, in August 2013, Ukraine imported more than 230 million cubic meters of gas from Poland and Hungary, reports Ukrinform.

Ukraine decreased the consumption of Russian gas from 41 billion cubic meters in 2010 to 27 billion in 2013, according to the September 2013 statement by the President of Ukraine Viktor Yanukovych. He noted that Ukraine's own gas production reached approximately 21 billion cubic meters per year, quotes Ukrinform. Moreover, Ukraine is developing alternative energy resources.