Gas in Ukraine trades at half the European price

The spread between natural gas prices in Ukraine and Europe reached €33/MWh on Monday, August 24, the highest level since late 2022, with gas trading at a lower price in Ukraine, according to ExPro calculations.

According to Natural Gas ExPro Quotations, prices for the September resource in Ukraine stood at 23,800 - 24,000 UAH/tcm (incl. VAT) on August 24, averaging 23,900 UAH/tcm (incl. VAT). After conversion, the gas price was €36/MWh (excl. VAT).

At the same time, September Front Month futures on the Dutch TTF reached €69/MWh on Monday, €33/MWh higher than in Ukraine. Gas prices in Ukraine’s commercial segment were 48% lower than at European hubs.

Reasons

The price gap between Ukraine and Europe is widening because the Ukrainian gas market is isolated. With European gas prices high, imports to Ukraine are uneconomic and therefore almost absent. Meanwhile, gas exports have remained prohibited since the beginning of the full-scale invasion, creating a surplus in the commercial segment of the Ukrainian market.

European prices are rising because the war in the Middle East and shipping disruptions through the Strait of Hormuz have reduced global LNG supply. Restrictions on Qatari exports have intensified competition between Europe and Asia for available LNG cargoes. Additional pressure comes from lower-than-usual stocks in European storage facilities and the need to continue injections ahead of winter.

The situation in Ukraine is the opposite. Gas supply in the commercial segment exceeds current demand, which is declining because of Russian attacks on industry. Over the past month, Russia has intensified strikes on the production facilities of Ukrainian industrial companies that are major gas consumers.

In addition, attacks on port infrastructure have created difficulties for maritime exports, forcing industrial companies to reduce production and natural gas consumption. Lower demand amid sufficient domestic supply is pressuring prices, which fell below 24,000 UAH/tcm (incl. VAT) for the first time in six months.

Where to find natural gas market analytics?

Detailed analytics of the natural gas market in Ukraine, including production, imports, exports, UGS reserves, trading results, natural gas prices, key news, etc., are published in specialized publications ExPro Daily Gas, ExPro Gas&Oil Weekly, and ExPro Gas&Oil Monthly.

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