Oleksandr Klymenko Official website
Articles | 1282 | 01.03.2017

The gas “Rotterdam plus”. How did authorities deceive Ukrainians

Ukraine Rotterdam plus Klymenko

Nowadays, Ukrainians are happy about the arrival of spring weather. It is also related to the end of the heating season, which cannot be afforded by population.

The authorities are also happy: citizens coped with “fair” gas prices. Therefore, it can be raised again.

 I will explain how does this scam work.

We should understand that there is a gas for population and for industry.

The population consumes Ukrainian gas (including for heating). We have more than enough fuel for these needs.

The industry consumes imported gas.

During the times of the “criminal power”, our Ukrainian gas was cheaper than imported gas. It was also related to the fact that heating prices were rather low for population.

The current government gave a bow to the IMF and agreed with the principle of import parity (it has come into force since the spring 2016).

It means that the cost of our gas, which is produced by Ukrgazdobycha, will not be formed by real costs, but the average price in German NCG hub that has developed during the half a year.

This price will also include the costs for [non-existent] transportation of fuel to Germany through entire Ukraine and from Germany to Ukrainian border. It is quite similar to “Rotterdam plus”. However, this time it comes about the gas (not coal).

In other words, Ukrainians will be forced to pay enormous sums for their own gas. Such price (of Ukrainian gas for population) is determined in dollars. Everything, including the fall of the hryvnia and exchange rate jumps, will be covered at the expense of the population.

This can happen since April 1: a year ago the forecast exchange rate was UAH 26,7 per dollar, in 2017 it was UAH 27,2 per dollar.

In addition, in a month the government will start to implement its new promises to the IMF.

In draft Memo with the Fund (paragraph 24), it is fixed that the power is obliged to revise gas prices for population if the price of imported fuel is changed by more than 10%.

It means that Groysman and Poroshenko called in question compliance with Article 13 of the Constitution of Ukraine by their decisions. In particular, the article states: “…natural resources shall be the objects of property rights of the Ukrainian people”, “Property shall not be used to the detriment of the individual or the society”.

In fact, our gas no longer belongs to us, Ukrainian people. We are forced to buy it not at prime cost, but for the price of foreign fuel.

The property of society is used against society, not for its benefit. It comes about anti-people policy. The power should not just leave, but appear before the court.

The price of gas that is imported from Europe for industry is also an interesting issue. In the third quarter, it was amounted to USD 199 per thousand cubic meters, in December it was USD 230. This year prices are growing. According to forecasts, the average price will be amounted to USD 240-250 dollars. Such cost is determined by supply and demand.

There is another Russian price. It includes the average cost of oil products for the last 9 months. Moreover, it is lower than European one. One day ago, Gazprom made a statement and announced its prices for 2017 for European markets. In particular, one thousand cubic meters of gas will cost USD 180-190 dollars in 2017 (in 2016 it was USD 167).

As we remember, the current power is not looking for easy ways. In addition, it is purchasing Russian gas only through Europe. As a result, there is a “tail” of USD 50-60 for each one thousand cubes. Nowadays, this tail will be sewn to a new [increased] Russian price.

Summing up:

  1. It was impossible to find more expensive gas for the industry. There is an unnecessary transit – mainly through Slovakia.
  2. It was impossible to find gas for the population. It was “invented” the non-existent transit through Germany.
  3. Prices will rise more than once: for both industry and the population.
  4. This is all, you need to know about economic pragmatism of the current government and its care for its own people.

P.S. If Groysman does not put his name down for imported parity for our gas, there is a calculation for such course of events (if you are interested in it).

Let me remind you that since February 1, the power has raised prices for industrial enterprises up to UAH 10,140 per 1,000 cubic meters (UAH 9200 under prepayment terms) for the report to the IMF.

It is also planned that the price of gas for the population will also rise.  Nowadays, it costs UAH 2 720. 10140 – 2720 = 7420. Thus, Ukrainian government will get UAH 7 420 per thousand cubic meters of lucre for Ukrainian gas.

If this price is multiplied by the amount of produced gas in the country, namely, 20.2 billion cubic meters, we will get UAH 149.9 billion per year. You should understand that it is enough money to pay pensions to all Ukrainian pensioners during the six months.

Link to source: Oleksandr Klymenko official Facebook Page

Photo: biz.nv.ua