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Ukraine to continue to diversify gas import while buying Russian gas

June 14, 2013, 5:01 UTC+3

The Russian natural gas flow cannot be reversed from Europe to Ukraine, Gazprom CEO Alexei Miller said

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KIEV, June 14 (Itar-Tass) - Reverse gas supplies from Europe to Ukraine are not a machination but a step towards liberalisation of the gas market, Minister of Energy and Coal Industry Eduard Stavitsky said on Thursday, June 13.

His remarks came as a reply to Russian Gazprom’s statements that questioned the legality of such supplies.

Gazprom said that serious European companies will not participate in “reverse” natural gas supply operations with Ukraine.

“Reverse supplies from Europe to Ukraine are not physically possible as there is no separate gas pipeline for that. So this can mean only some ‘paper’ obscure operations the legitimacy of which has yet to be investigated. If our transit gas is used for ‘virtual’ reverse supplies, this is a direct violation, for which one will have to be held responsible,” Gazprom spokesperson Sergei Kupriyanov said earlier this week.

“We are confident that serious European companies will not participate in doubtful gas operations with Ukraine, which involve Gazprom gas which does not belong to Naftogaz Ukrainy,” Kupriyanov said.

The Russian natural gas flow cannot be reversed from Europe to Ukraine, Gazprom CEO Alexei Miller said.

For decades gas was supplied to Ukraine from the east from Russia and Turkmenistan. Recently, Ukraine said it had received gas from the West. Experts think that liquefied gas is transported to Ukraine from European seaports by pipelines via Poland and Slovakia.

Stavitsky said this was a reaction to “the liberalisation of Ukraine’s energy market.”

He stressed that his ministry has been tasked with liberalising supplies of natural gas and other energy resources and noted the importance of further reverse gas supplies, including via a third corridor through Slovakia along with the current supplies through Poland and Hungary.

“It is very important for us that our Russian colleagues understand that we are not begging. We are saying that the question of price [for the Russian gas for Ukraine] should be addressed in a principled manner and that the contract signed in 2009 is not consistent with present-day realities,” the minister said.

He expressed hope that the talks between Kiev and Moscow on a new price of gas “will be brought to a logical end” and a “fair price” will be set for Ukraine.

Stavitsky said Naftogaz Ukrainy has filed a request for purchasing about 350 million cubic metres of Russian gas from Gazprom in June.

He said the amount of gas to be purchased in June will be comparable to that in May when Naftogaz Ukrainy imported about 320-350 million cubic metres of gas from Russia at a price of 403-405 U.S. dollars per 1,000 cubic metres.

Stavitsky said that Kiev has “already made progress” in reducing its dependence on Russian natural gas and will “launch a second line for diversification of supplies” shortly.

According to the minister, the price of natural gas in Europe starts “from 350 U.S. dollars per 1,000 cubic metres. Leading European traders’ projections range within 250-280 U.S. dollars in the second half of the year,” he said.

“This is why we hope to lower the average annual price of gas per 1,000 cubic metres,” he added.

The European Union has promised assistance to Ukraine in diversifying natural gas supplies.

“The European Union promised to help diversify natural gas supplies, which undoubtedly affects the price of gas bought from Russia,” Stavitsky said

Kiev is planning to buy about 290 million cubic metres of gas in Europe in reverse moder (about 140 million cubic metres will be delivered through Poland and the rest through Hungary).

Ukraine has been receiving natural in reverse flows from Europe since November 1, 2012. The gas is supplied across the Ukrainian border with Poland under a contract with from German RWE.

The gas is supplied across the Ukrainian border with Poland. RWE may supply up to 5 billion cubic metres of gas to Ukraine until May 2013. Last year Naftogaz Ukrainy imported 55 million cubic metres of gas using the reverse flow scheme.

Naftogaz Ukrainy has signed a contract with RWE Supply and Trading (RWE ST, Germany) for the purchase of natural gas on the border between Poland and Ukraine.

The throughput capacity of Ukraine’s gas transportation system on the Western border is about 40 billion cubic metres.

In 2014, Ukraine plans to buy not more than 18 billion cubic meters of Russian gas. “The amount of Russian gas to be imported in 2014 may be about 18 billion cubic metres or even less,” Naftogaz Ukrainy CEO Yevgeny Bakulin said.

In 2013, Ukraine is to buy 27.3 billion cubic metres of natural gas, including 18 billion cubic metres from Gazprom.

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