Ukraine prepares for the 2013/14 heating season in advance / EPA / ITAR-TASS

On Wednesday in Moscow, Gazprom CEO Alexey Miller and Ukrainian Deputy Prime Minister Yuriy Boyko discussed issues related to pumping gas into Ukrainian underground gas storage facilities. A representative of the Russian monopoly declined to comment. However, as a source close to one of the parties told Vedomosti, the Ukrainians asked to extend Gazprombank's current $2 billion loan and provide another $2 billion to purchase an additional 5 billion cubic meters of gas (the bank's representative did not comment on this).

RWE will start pumping gas into Ukrainian underground gas storage facilities in September, promised the Minister of Energy and Coal Industry of Ukraine Eduard Stavytsky, Interfax reports. "We are currently working on a new agreement, which will come into force in the second ten days of September," Stavytsky said. A representative of RWE Supply & Trading declined to comment on Stavytsky's words, explaining that he does not want to "comment on gossip on the market." He told Vedomosti that under the current framework agreement with Ukraine's Naftogaz, his company can annually supply Naftogaz with up to 10 billion cubic meters of gas until 2017. According to Stavytsky, Ukraine plans to import about 2 billion cubic meters of gas from Europe in 2013, and 5-6 billion cubic meters in 2014.

As of the end of August, there are more than 12 billion cubic meters of gas in Ukrainian storage facilities. Stavytsky also recalled that Ukraine plans to enter the 2013-2014 heating season with natural gas reserves at a minimum of 14 billion cubic meters. The minister added that he is negotiating with partners from Russia to have 18-19 billion cubic meters in underground gas storage facilities. "RWE allocates the gas that RWE supplies and transmits to Naftogaz at the border with Ukraine from the volumes that are used for sale to customers in Europe. We cannot comment on how Naftogaz will use the gas it purchases inside Ukraine. RWE does not have its own gas storage facilities in Ukraine," the RWE representative emphasized.

Gazprom has already provided Naftogaz with a $1 billion advance payment for transit. The capacity of the Ukrainian gas transportation system is about 140 billion cubic meters per year. "In 2012, Gazprom's transit deliveries to Europe through it amounted to about 80 billion cubic meters. Gazprom paid Ukraine about $30-31 for the transit of every 1,000 cubic meters of gas. Thus, the total cost of transit through Ukraine last year was about $2.5 billion," calculated Grigory Birg, co-director of the analytical department of Investcafe. If there are no plans to reduce the pumping, Naftogaz can count on another $1.5 billion in advance, the expert notes. Gazprom is interested in having enough gas in Ukrainian storage facilities during the winter period, which means that if the Ukrainian government provides its guarantees for the loans, it can be assumed that the Ukrainians will receive the money," says a source close to one of the parties to the negotiations.

Ukraine's statements that RWE will supply gas to underground gas storage facilities may be only part of the negotiation process between Ukraine and Russia, says Lev Snykov, a partner at Greenwich Capital. "Most likely, Ukraine will not be able to seriously count on the support of the Europeans. Gazprom will most likely make a concession by demanding maximum preferences," the expert believes.

Ukraine fills storage facilities