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Ukrainian, EU experts explore reverse-flow gas supply possibilities

June 25, 2014, 21:53 UTC+3 BRUSSELS

Minister Yuriy Prodan said Ukraine could become independent from Russian gas “if Slovakia begins large-scale reverse-flow supplies”

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BRUSSELS, June 25. /ITAR-TASS/. Ukrainian and EU experts on Wednesday, June 25, began exploring possibilities for reverse-flow gas supplies to Ukraine, EU Energy Commissioner Gunther Oettinger said after talks with Ukrainian Energy and Coal Industry Minister Yuriy Prodan.

He said the sides had agreed to continue bilateral talks next week on an open and transparent basis.

Prodan said Ukraine could become independent from Russian gas “if Slovakia begins large-scale reverse-flow supplies” and added that closely linked to this issue was “the pumping of gas into underground storage facilities is closely linked”.

“Everything will depend on how much reverse-flow gas we can buy from Europe. We have been getting some very good offers from European companies at prices that are much better than those of Gazprom, even after discounts,” he said.

“We hope we will be able to begin ‘minor’ Slovak transit from October 1 even though some technical issues remain to be worked out,” Prodan said.

As for the “big” revere-flow supplies, he said “the gas transportation network in the direction of Slovakia is working at only 40% of its capacity. So there is a possibility.”

Oettinger confirmed that the European Union was committed to reverse-flow gas supplies to Ukraine but this gas would be sold at market prices to be determined by the companies that sign relevant contracts.

Prodan said he was hopeful that “big reverse-flow supplies” would give Ukraine “up to 30 billion cubic meters a year”.

Oettinger’s spokesperson Sabine Berger said Ukraine could count on no more than 8 billion cubic meters of reverse-flow gas a year through Slovakia a part of the “minor reverse-flow scheme”. Gas will be supplied by the Vojany-Uzhgorod pipeline, not the transit pipeline.

As for the “big reverse-flow supplies” there is no concrete agreement yet as it would require Slovakia to agree to reverse the flow of gas by a trunk pipeline, which it is not prepared to do because this would run counter to its contract with Gazprom.

Oettinger said reverse-flow gas supplies from Slovakia to Ukraine by the trunk pipeline would be impossible without Gazprom’s consent as it would run counter to the Slovak company Eustream’s contractual obligations.

However he said such supplies by the Vojany-Uzhgorod pipeline would not require the Russian company’s agreement and would give Ukraine up to 10 billion cubic meters of a gas a year.

Oettinger believes that diversification of supplies will help to solve Ukraine’s gas problem in part. However reverse-flow supplies from Poland and Hungary by the Vojany-Uzhgorod pipeline will not be enough for Ukraine get through the coming winter comfortably.

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

Kiev is planning to buy about 290 million cubic meters of gas in Europe in reverse mode (about 140 million cubic meters 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 planned to supply up to 5 billion cubic metres of gas to Ukraine until May 2013. Last year, Naftogaz imported 55 million cubic meters of gas using the reverse flow scheme.

Gazprom said it might impose restrictions on European companies which supply gas to Ukraine using reverse-flow mechanisms.

“A reverse flow is a semi-fraudulent mechanism whereby gas runs in circles. But this is Russian gas,” Gazprom CEO Alexei Miller said.

Miller said that the points where gas was delivered to and accepted by European consumers were located in Europe, but “Ukraine uses our gas [intended for Europe] on its territory any way it likes”.

“Reverse-flow gas supplies run counter to the contracts with European companies that buy Russian gas, and for that reason restrictions may be imposed on them,” Miller said.

In 2013, Ukraine consumed about 50 billion cubic meters of gas.

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