12:36 10.12.2019

Guaranteed gas price for public in Q1, 2020 will be UAH 5,500 excluding VAT, transportation tariffs – Naftogaz

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Guaranteed gas price for public in Q1, 2020 will be UAH 5,500 excluding VAT, transportation tariffs – Naftogaz

The guaranteed price of natural gas for the population in the first quarter of 2020 will be UAH 5,500 per 1,000 cubic meters (excluding VAT, transportation costs and gas sellers' margins), director of the integrated gas business of Naftogaz Ukrainy Andriy Favorov has said in an interview with Interfax-Ukraine.

According to him, the guaranteed price is determined based on the price of 1 billion cubic meters of gas contracted by Naftogaz with the delivery from January 1 to April 1, 2020.

"Having fixed the physical volumes and understanding that it is necessary to propose a market mechanism to solve the market problem, we fixed prices for forward contracts for the entire first quarter. The last volumes for forwards were recorded on December 6. We did not want to announce this topic publicly before, since these are quite serious volumes and they could move the price against us," he said.

Favorov reminded that the memorandum with the IMF obliges Ukraine to abandon the PSO regime in terms of pricing from January 1, 2020, while Naftogaz's obligation to supply gas to the population and heating companies remains until May 1, 2020.

According to him, Naftogaz, in the course of discussions with the government and the IMF, proposed a hedge price option [guaranteed], since under a crisis scenario involving interruption of transit through Ukraine's gas transportation system, the price in Europe could exceed UAH 10,000 per 1,000 cubic meters.

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