Ukraine's national oil and gas company Naftogaz Ukrainy and Poland's state oil and gas producer PGNiG are to settle the pricing parameters of a contract for natural gas that is to be supplied to Poland, Deputy Ukrainian Energy and Coal Industry Minister Volodymyr Makukha told reporters in Kyiv on Wednesday.
The main coordination of contract terms will begin after Ukrainian President Viktor Yanukovych signs into law a bill on the functioning of the country’s natural gas market that will regulate the legal basis for resuming shipments of Ukrainian gas to Poland.
"The law will be signed [by the president], and then we will have a foundation for resuming exports. Then we will need to work through the main contract terms, and then we will begin actual deliveries," Makukha said. This means defining all the main parameters of an existing agreement between Naftogaz Ukrainy and PGNiG, he said.
"The contract is ‘raw’ now, because conditions have changed completely, and we still have a lot to clarify – that is shipment volumes, timing, and cost. For example, the question has arisen as to how much gas Poland needs before the end of the year," Makukha said.
As reported, Ukraine’s parliament, the Verkhovnaya Rada, gave the go-ahead to the export of Ukrainian natural gas on June 17, which will allow Naftogaz Ukrainy to fulfill a gas-supply deal with PGNiG.
The bill slated to be signed into law adds to the terms allowing Naftogaz and its subsidiaries to export gas produced in the country in an amount determined by the Energy and Coal Industry Ministry.
Naftogaz Ukrainy and PGNiG clinched a deal in October of 2004 on building a medium-pressure gas pipeline between Ustilug in Ukraine and Hrubieszow in Poland to supply the southeastern portion of Poland with gas. Pipeline construction was completed in September of the following year.
The two companies reached an agreement on supplying gas via this pipeline on October 24, 2004. It stipulates that the Ukrainian company is to deliver natural gas of Central Asian or Ukrainian origin to PGNiG.
Naftogaz Ukrainy halted gas exports to Poland via the Zosin border crossing near Hrubieszow as of January 1 this year. The company had also suspended gas exports to Poland in September-October of last year.
PGNiG said shipments had to resume, since they are contracted for in the period until the end of 2020.
The projected balance between natural gas receipt and distribution in Ukraine last year envisioned exports of gas from the stocks of Ukrgazvydobuvannia of 9 million cubic meters. That same amount was envisioned for 2009 and 2008, as well (6 million cubic meters in 2007).
The gas balance for this year has yet to be announced, but Makukha said the contract between Naftogaz Ukrainy and PGNiG assumes the delivery of around 200 million cubic meters of gas in 2011. Not less than that is envisioned for subsequent years, he said.
Roughly 20 billion cubic meters of natural gas is extracted in Ukraine each year, but more than 90% of that is sold domestically by Naftogaz Ukrainy as specified by existing Ukrainian law.
