Austrian trader in gas swap with Ukrainian fertiliser producer

Ukrainian fertiliser producer Odessa Port Plant (OPZ) has signed a gas-for-fertilizers deal – tolling agreement – with Austria-based trader Antra, a source at the commodities trader confirmed late on Tuesday.

In return for supplying an undisclosed amount of natural gas as feedstock, Vienna-headquartered Antra will receive ammonia and urea manufactured at the state-owned OPZ each month.

Previously, OPZ received natural gas from Ukrainian incumbent Naftogaz, which obtains gas both from Russia and increasingly from European countries, particularly Slovakia.

Antra would not specify to ICIS details of the deal other than that the gas was delivered at the western border of Ukraine. Antra did say it was delivering gas to several customers in Ukraine including end-users and traders, in contracts of varying durations, and that there was plenty more interest from Ukrainian end-users.

The new Ukrainian gas law, which came into force on 1 October, was crucial in enabling independent suppliers to send gas to Ukrainian end-users according to Antra. The Austrian company also said that it had a very positive experience in dealing with Naftogaz and the Ukrainian transmissions system operator (TSO), Ukrtransgas, when conducting deliveries into Ukraine.

Antra is registered on the CEGH Austrian trading hub and the company is active in the Slovak, Czech and Austrian markets. OPZ was not available for comment.

Independent importers

Since the coming into force of the new gas law independent importers have been making greater inroads into the Ukrainian market.

Naftogaz itself is encouraging this trade by offering secondary transport capacity on the Budince point for gas entering Ukraine from Slovakia (see ESGM 13 October 2015). The Ukrainian Association of gas traders told ICIS on 11 November that eight companies have now requested capacity from Naftogaz for the Budince point for November and have been granted it. Whether they would have access to this capacity in December and into 2016 would depend on whether Naftogaz would need it for its own imports from Slovakia, according to the association.

The main difficulty for independent traders at the moment arises from foreign exchange restrictions imposed by the Ukrainian banks, with the Ukrainian Hryvnia not being freely convertible. This was done in order to stop an exodus of foreign exchange from the country in the current difficult economic and political conditions. Antra’s gas-for-fertiliser swap arrangement may have been a way of partially getting around this problem.

An impediment to independent gas importers in the near future will be a mandatory storage requirement which was to have come into effect this year, but which was eventually postponed until 1 January 2016 (see ESGM 15 November 2015). The storage law will allow only those suppliers which have in reserve one month’s worth of their predicted annual gas sales to participate in the market – this applies only to those supplying end-users.

Independent companies active in Ukraine are lobbying for the law to be changed before the beginning of next year, saying the costs of keeping gas reserves will be too great for smaller traders and put them at an unfair competitive disadvantage with incumbent Naftogaz. elizabeth.stonor@icis.com