Photo from UNIAN
Nadein outlined the best-case and worst-case scenarios for prices of natural gas in Ukraine.
Ukraine's energy expert Ivan Nadein says prices of natural gas for Ukrainian households may decline significantly from January 1, 2020, if negotiations on Russia's gas transit through the Ukrainian gas transmission system (GTS) are successful.
Read alsoNaftogaz, Gazprom to continue looking for options to prolong gas transit via Ukraine
"Given the negotiations and reports that a compromise on gas may be reached, it was announced that the price of gas could be 25% down from the market one in Europe. We can predict that the price may further fall in January," he said in a comment on Russian President Vladimir Putin's promise to grant Ukraine a 25% gas price discount, according to the Ukrainian online news outlet Obozrevatel.
Nadein recalled that National Joint-Stock Company Naftogaz of Ukraine in December announced a 12.7% reduction in gas prices for households and district-level central heating providers it sells gas to under public service obligations (PSOs).
"This is already almost 20% down from the price set in the same period last year. If the 'bare' price (excluding transportation and VAT] is below UAH 4,000 [US$170] per 1,000 cubic meters, this may be the best-case scenario," he said.
The expert also outlined the worst-case scenario.
Yet, Nadein added, if there is no transit of Russian gas from January 1, this will "affect the European gas price, and accordingly, will affect the February gas price for Ukrainians."
According to the expert, Ukraine is seeking transparent market pricing, rejecting the "artificial administrative one, as one person wants."
"This is how the price in Europe is formed today: there are exchanges, and the prices are set according to supply and demand. This is the fairest pricing. But the market will respond to a decrease in supply since the market-based rules are also applicable to gas pricing," the expert said.
"If our [gas] transit is extended, there is a 25% discount on what we buy today in Europe. This discount can be incorporated in the end consumer's gas price ... There are all prerequisites to say that the price may fall. This scenario is actually fixed today, and everyone starts using it. Even Naftogaz's price cut for households today is already a signal that there is a commitment to the 'non-revolutionary' scenario from January 1," Nadein summed up.