28 Feb 2023 12:02

Ukrainian Railways to buy natural gas from Ukrnafta

MOSCOW. Feb 28 (Interfax) - Ukrainian Railways signed a contract with the Ukrnafta state company to buy natural gas, 8 million cubic meters of which will be delivered in March.

"Direct contracts with manufacturers are our vector of the development of relations in strategic procurements. Today we have a proper, advantageous gas price alongside the most transparent contract between two companies owned or managed by the same proprietor, the state," the Ukrainian media quoted Ukrainian Railways CEO Alexander Kamyshin as saying.

"Ukrnafta is a national extraction company, which has a sufficient stock in storage facilities and can offer the necessary amounts, the best price and convenient terms of supply," Ukrnafta Director Sergei Koretsky said on a social network.

The price for gas to be delivered by Ukrnafta in March is 23% lower than the current price offered by traders at an open and competitive auction, which will save UAH 47 million in March alone, Ukrainian Railways board member Yevgeny Lyashchenko said.

Considering the planned procurement amount, 8 million cubic meters, the purchasing price will near UAH 19,700 per 1,000 cubic meters.

It is planned to broaden bilateral cooperation between companies to accommodate the needs of Ukrainian Railways to the utmost extent, Koretsky said.

The Reconstruction Ministry said in late January that Ukrainian Railways' trader, Energo Sbyt Trans, purchased natural gas for corporate needs without intermediaries for the first time in January, thus lowering the price to UAH 18,600 per 1,000 cubic meters. It said that the next step would be direct procurement of natural gas from extracting company for the needs of Ukrainian Railways.

Back in 2021 Ukrainian Railways were allowed buying electricity from Energoatom and other state-run generation companies for the next three years in a facilitated procedure. The government also allowed Ukrainian Railways to buy petroleum products directly under foreign economic contracts.

According to ExPro, Ukrnafta cut gas production by 7% to 1 billion cubic meters in 2022.

The headquarters of the supreme commander-in-chief allowed on November 5, 2022, that Ukrnafta shares (except for the controlling stake of Naftogaz of Ukraine) be impounded by the state for the martial law period. Before the impoundment, entities of Igor Kolomoisky and Gennady Bogolyubov controlled about 42% of the Ukrnafta stock.

According to the Ukrainian Energy Exchange, the price of gas to be delivered in March stood at UAH 17,000 - 17,600 per 1,000 cubic meters (without VAT) at the latest auctions.