Ukrainian national energy company Naftogaz Ukrayiny has agreed to deliver 440 million cu m of natural gas to its shipping subsidiary UkrTransGaz in a move needed to maintain the steady operation of the country's gas transportation system, UkrTransGaz said Thursday.
The decision comes after the refusal of private gas traders to deliver volumes to the shipping company amid concerns about its financial position and following major debt restructuring plans.
"We have reached an agreement on the urgent delivery of 440 million cu m of gas for gas transportation system operation," UkrTransGaz said in a statement. "The gas is worth Hryvnia 2.96 billion [$116 million] and will have deferred payment until February 29, 2020."
The move highlights that gas shipping operations in Ukraine are still at risk despite Naftogaz having raised about $1 billion in a eurobond sale last week to support its financial position.
UkrTransGaz said the agreement with Naftogaz will be signed later this month and is only a "temporary solution" that will allow Ukraine's gas pipelines to operate steadily for two months.
"We will temporarily solve the emergency situation because this gas will be enough for two months of steady operation of the gas transportation system," UkrTransGaz said.
UkrTransGaz said that over the past few weeks "requests have been submitted to more than 200 traders" but no one has been willing to provide it with gas supply.
"Only Naftogaz has agreed to supply part of the required gas with an option of deferred payment," it said.
In May and June, UkrTransGaz held a total of 12 tenders seeking to secure gas supplies from private traders.
DEBT TALKS
UkrTransGaz said Thursday it has been in talks with two major private gas traders, Axpo and Trafigura, about gas debt restructuring, following a major debt restructuring and repayment deal with ERU Trading, previously its biggest private supplier.
The gas shipment company has agreed that, by the end of July, it will pay Hryvnia 293.7 million in debt owed to Axpo for gas supplied in May and June, while similar talks with Trafigura are under way, the company said. UkrTransGaz owes Hryvnia 1.06 billion to Trafigura.
The Ukrainian company also said it owes Hryvnia 1.96 billion to Naftogaz.
UkrTransGaz has repaid Hryvnia 1.47 billion in debt owed to ERU Trading this month, days after Naftogaz's eurobond sale.
Last month, UkrTransGaz said it had accumulated significant debts of some Hryvnia 4.1 billion to the suppliers of the technical gas required to maintain the stability of Ukraine's gas shipment system.
UkrTransGaz operates Ukraine's vast gas pipeline network and the country's underground storage facilities.
