RUSSIA'S GAS DISCOUNT: 20-25%

PLATTS - Russia has proposed resuming direct gas sales to Ukraine of around 15 Bcm a year, Russian energy minister Alexander Novak said Wednesday.

Speaking to reporters in Moscow, Novak said this was the volume that had been discussed at recent trilateral talks with Ukraine and the EU on future arrangements for Russian gas transit via Ukraine to Europe.

"The total volume is [...] based on demand needs," Novak said.

Last week, President Vladimir Putin said Russia wanted to resume direct gas sales to Ukraine -- and would be prepared to reduce the price Kyiv paid by 20%-25%.

"I believe that this is in the interests of the citizens of Ukraine," Putin said.

State-owned Naftogaz has rejected the 20%-25% price discount, though, saying the price Ukraine would pay for Russian gas should anyway be much lower than the rest of Europe given the country's proximity to Russia.

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Ukraine suspended direct imports of Russian gas in November 2015, instead focusing on its own production and European gas imports to meet its demand.

In 2018, European imports totaled 10.6 Bcm, according to data from grid operator UkrTransGaz.

Russia's Gazprom has said it now wants to resume direct sales to what was once one of its biggest markets, and has linked the issue to future transit by saying it would keep part of its network close to Ukraine operational if gas supplies were needed by Ukraine itself.

Ukraine, though, has repeatedly ruled out buying gas directly from Gazprom, saying it could never be depended on as a reliable supplier.

It has, however, put forward a suggestion that it could buy Russian gas from a different company -- such as independent producer Novatek.

Ukraine in 2005 bought almost 64 Bcm of Russian gas to meet its sky-high demand, which that year was 76 Bcm.

It gradually reduced its Russian imports to just 6 Bcm in 2015 from 45 Bcm in 2011 due to a sharp drop in demand to just 34 Bcm that year.

It met the rest of its demand needs from 2013 with the start of imports from Europe -- many of which are thought to be Russian gas sent via Ukraine into Europe and then reverse-flowed back into Ukraine.

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