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Ukraine's Naftogaz says Gazprom wants to end gas compensation contract June 23

June 19, 2014, 21:25 UTC+3 KIEV
The decision to terminate the contract “has no economic substantiation and increases the risk that Gazprom fails to perform its contractual obligations to European customers,” Naftogaz says
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Naftogaz Board chairman Andrey Kobolev

Naftogaz Board chairman Andrey Kobolev

© EPA/SERGEI CHIRIKOV

KIEV, June 19./ITAR-TASS/. Ukraine’s state energy company Naftogaz Ukrainy said on Thursday Russia’s gas monopoly Gazprom wants to terminate the contract that obliges the Ukrainian partner to compensate for daily fluctuations of gas consumption in Europe.

At the moment, Gazprom pays Ukraine if Kiev is forced to provide Europe with increased supplies of gas from its underground storage sites.

Naftogaz said the agreement would be terminated on June 23.

“According to the agreement, in the event that Europe’s demand for gas supplies substantially exceeded the request made to Gazprom Export the day before, Ukrtransgaz compensated to the extent technically feasible for necessary volumes by own resources, after which the Russian side paid for the services,” Naftogaz said.

“It takes nearly 36 hours to transit physical volumes of gas through Ukraine’s territory. In the absence of such a treaty, the Ukrainian operator will be responsible for compensating for significant fluctuations in daily consumption volumes,” it said.

The decision to terminate the contract “has no economic substantiation and increases the risk that Gazprom fails to perform its contractual obligations to European customers”, it said. “Hindering the creation of sufficient gas reserves in Ukraine’s underground storages poses similar risks to Gazprom’s reliability in Europe.”

Naftogaz Board chairman Andrey Kobolev regards Gazprom’s intention to sever the contract as another attempt to lobby the South Stream underwater gas pipeline project from Russia to Bulgaria.

He said the Ukrainian side was ready to do its utmost “so that the Gazprom Export’s decision will not affect reliability of gas supplies to the European Union”.

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