Ukraine Opposes US LNG Pricing Formula

EghtesadOnline: Ukraine’s state-held gas firm Naftogaz is reportedly opposed to the pricing formula for US liquefied natural gas it could receive under a long-term contract, while there isn’t enough infrastructure ready to ship American LNG from Poland into Ukraine, analysts have said.

News ID: 750550

The US is eager to supply its LNG to central and eastern European markets, especially Poland and Ukraine, arguing that American gas is superior to gas from Russia, which binds economic contracts with politics, Oil Price reported.

However, talks between Louisiana Natural Gas Exports Inc and Ukraine’s Naftogaz have stalled, reportedly because the Ukrainian company doesn’t agree with the US firm’s proposal to have the price of the LNG under a 20-year contract linked to the US natural gas benchmark Henry Hub, without any reference to European gas prices, analysts said.

In May, the government of Ukraine, which is keen to wean itself off Russian energy supplies, approved a plan to import LNG from the United States. Under the memorandum approved by the government, Ukraine would be importing at least 5.5 billion cubic meters of LNG annually, while the seller will be Louisiana Natural Gas Exports.

Ukraine has been seeking for years to diversify its oil and gas supplies away from Russia after Russia annexed Crimea in 2014. The Russian annexation of Crimea drew reactions from the US and the EU, which imposed sanctions on some Russian energy firms and projects, prohibiting Western firms and banks from working with Russian projects.