Arbitrage Opportunities on Eastern European Natural Gas Market

In November 2015 Ukraine ceased import of natural gas from Russian companies. Besides political reasons, such a response was a result of increasing tensions with Gazprom on two key questions: terms of Russian gas transit to Europe through Ukrainian GTS, and price of gas import to Ukraine. According to Minister of Energy of Ukraine Volodymyr Demchyshyn, gas price proposed by Gazprom in 2015 (247,8 USD/tcm) was even higher than price for reverse import of gas from European countries. This decision was a part of complex Ukrainian gas market reform launched in 2014. The following steps – adoption of new legislation, unbundling of gas transmission from supply and production, corporate governance reform of Naftogaz of Ukraine (the largest energy company in Ukraine, state-owned), partial liberalization of domestic natural gas prices etc. – resulted in dramatic changes of gas market landscape.