KIEV, November 27, 21:15 /ITAR-TASS/. President Viktor Yanukovich said Ukraine would reduce gas purchases of Russian natural gas at the current high price.
“We are working to create such conditions that will make it unprofitable for Russia to sell overpriced gas to Ukraine,” Yanukovich said in an interview with Ukrainian television channels on Wednesday, November 27.
He said Ukraine had already reduced gas purchases from Russia by 18 billion cubic metres. “We will do everything we can to reduce the purchases of this gas,” the president said.
Yanukovich believes that the gas agreements with Russia of 2009 undermine Ukraine’s economy. “The gas agreements of 2009 are the bomb that was put under the Ukrainian economy. We are weak today. The Ukrainian economy is sick,” he said, adding that “there is a shortage of money” but “any reform needs funding.”
“The average European price of gas should be under 370 U.S. dollars, less 70 U.S. dollars for transportation, which makes it 300 U.S. dollars [per 1,000 cm]. And this should be the maximum price for Ukraine,” the president said.
Asked why Ukraine had not started taken the case to an arbitration court, Yanukovich said, “Don’t you think we were not considering that? Going to an arbitration court and losing it means legalising the issue forever. We have decided to postpone it for a while because there are big risks involved.”
However “we worked and are working” on this, he added.
Yanukovich said earlier that 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.
Over the past three years Ukraine has cut gas purchases from Russia from 40 bcm to 11 bcm a year.
Ukrainian Prime Minister Nikolai Azarov said earlier that Ukraine would further reduce the import of natural gas from Russia if the latter refuses to cut its price.
“We have already reduced gas import and we will reduce it further if Russia does not agree to lower its price,” Azarov said.
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 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 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.