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Prime Minister: Ukraine to further reduce gas import if Russia refuses to cut its price

September 21, 2013, 21:47 UTC+3

The transit of Russian gas to Europe via Ukraine was also decreasing

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YALTA, September 21 (Itar-Tass) - Ukraine will further reduce the import of natural gas from Russia if the latter refuses to cut its price, Ukrainian Prime Minister Nikolai Azarov said.

“We have already reduced gas import and we will reduce it further if Russia does not agree to lower its price,” Azarov said on Saturday, September 21, at the Yalta European Strategy (YES) Conference, which is the largest social institution of public diplomacy in Eastern Europe, providing an open and equal dialogue on global issues affecting the European Union, Ukraine, Russia and other countries. This is a non-partisan organisation established in 2004.

He said the transit of Russian gas to Europe via Ukraine was also decreasing. “The Ukrainian gas transportation system can transport 150 billion cubic metres of gas. We can transport even 200 billion cubic metres, but only if it is necessary. However now supplies have dropped to one half of what they were before. And we are using such a gigantic system at 60 percent of its capacity,” the prime minister said, adding that Ukraine was paying “the enormous costs of maintaining the system to transport Russian gas to Europe.”

“Why should we bear these costs alone? Fifty billion cubic metres of gas would be enough for us. Let’s solve the problem together, especially since Ukraine is a member of the European Energy Charter. Ukraine cannot sustain such enormous costs alone,” he said.

The prime minister warned that Ukraine might stop transporting gas via two strings of its gas transportation system. “If the volume of transit gas from Russia to EU countries does not increase, it would be reasonable to consider suspending the operation of two strings of the Ukrainian gas transportation system,” he said, noting that this decision would have to be negotiated with the EU countries

Ukraine intends to consume 27 bcm of natural gas from Russia in 2013.

“Ukraine has already reduced Russian gas consumption. While in 2010 we used 41 bcm, this year we will bring it down to 27 bcm,” Ukrainian President Viktor Yanukovich said.

He said Ukraine’s energy policy was aimed at diversifying gas supplies. “Ukraine has already started buying natural gas in Europe at much lower prices and we will continue to do this unless we find a common language with our Russian partners,” the president said.

Ukraine is also boosting its own gas production. “Since 2010 we have increased gas production by 3 bcm and produce about 21 bcm of our own gas now,” he said.

Ukraine said it would import 2-2.5 bcm of natural gas from Europe this year and at least 5 bcm in 2014.

The state-owned company Naftogaz Ukrainy had reduced the import of gas from Russia by 30 percent since the beginning of this year and would cut it further in 2014 while doubling gas purchases in Europe at the same time.

Kiev is planning to strike a deal with a consortium led by ExxonMobil and Shell in the next two months to develop the Skif field in the Black Sea.

Naftogaz Ukrainy will import 2-2.5 bcm of natural gas from Russia in August and about 18 bcm altogether in the whole of 2013, Stavitsky said.

Ukraine has been consistently seeking to reduce the import of Russian natural gas due to its high price. In the first six months of this year, Ukraine bought less than 10 bcm of gas from Russia’s Gazprom, a decrease of 40 percent from the previous year.

In 2012, Ukraine reduced the import of Russian gas by 26.5 percent from 2011 to 32.939 bcm.

Energy and Coal Industry Minister Eduard Stavitsky said earlier that Kiev had “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.

In 2014, Ukraine will buy no more than 18 billion cubic metres 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 will buy 27.3 billion cubic metres of natural gas, including 18 billion cubic metres from Gazprom.

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