You're reading: Ukrainian govt to let Naftogaz buy gas without tenders

Ukraine's cabinet of minister is proposing that national oil and gas stock company Naftogaz Ukrainy be permitted to buy without the application of tender procedures services associated with trading in natural gas.

The corresponding law bill on amendments to Article 2 of Ukrainian law regulative state procurement was registered in parliament on Friday, Apr. 6.

In the event it passes in the government version, Naftogaz Ukrainy would be allowed to buy without tenders "natural gas, [and] services for its transportation (including the transport, freighting, insuring, loading/unloading, inspection of quantity and quality), distribution, delivery, [and] storage."

The company would also be able to – without tenders – purchase the services of financial instruments, operations with derivatives and risk-management, financial services, the services of exchanges, auctions, electronic trading systems, and other services applied in international trade and financial practice in the purchase and sale of natural gas.

The explanatory note attached to the bill says that passing it into law would aid in ensuring the oil and gas complex’s efficient operation and development, that the gas needs of the population are met, and that the level and robustness of state energy security are enhanced.

In light of Gazprom plans and announcements as to substantially reducing Russian gas transit to Europe through Ukraine’s gas-transport system, the country is looking overt the possibility of using its gas-transport in the reverse direction.

Around the middle of last month, Naftogaz Ukrainy chief Yevhen Bakulin announced negotiations over the purchase of up to 10 billion cubic meters (bcm) of natural gas in Europe. And, Energy and Coal Industry Minister Yuriy Boiko spoke of Ukraine’s intentions to start buying gas on spot markets in Europe this summer.

Prime Minister Mykola Azarov said that if talks with Russia aimed at getting the price of gas down prove fruitless, Ukraine could buy Russian gas from the German company RWE.

Market experts say the country would be able to buy on up to 20 bcm per year on European spot markets and import the gas through Slovakia starting in 2015 or 2016.