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Ukraine plans to break Gazprom's monopoly

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Published 13 March 2012, updated 19 March 2012

Ukraine plans to sign a contract with Germany's RWE energy company to import gas through Slovakia using reverse-flow technology. Although relatively small, the project is the first attempt by Ukraine to reduce its dependence on imports from Russia's Gazprom monopoly.

Ukraine wants to purchase three million cubic meters of gas from RWE per day, Ukraine's Zerkalo Nedeli weekly reported.

"NaftogazUkraine plans to sign a short-term contract with Germany's RWE to deliver spot gas, bought in Europe, through Slovak pipelines to Ukraine. The signing is likely to happen in the nearest future," says the report on the newspaper's website.

According to the draft contract seen by Zerkalo Nedeli and to comments by specialists, the agreement is seen as "balanced" and unlike similar deals with Russia, it does not contain "excessive" conditions.

The newspaper also reported that Ukraine held talks with Turkey and Bulgaria to deliver liquefied natural gas from Turkish storage facilities through the Bulgarian gas transportation system.

Turkey and Bulgaria see no objection to the scheme, the report says. Bulgaria has reportedly laid down a parallel gas pipeline to the one used to bring Russian gas, which could allow reverse flows to Romania. Ukraine and Romania would have to agree on pipeline route to serve the Ukrainian market.

Gas price talks between Ukraine and Russia have dragged on for more than a year without tangible results.

Previous disputes between Russia in Ukraine have briefly disrupted gas supplies to Europe, prompting both Gazprom and the European Union to look for alternative transit routes such as the Nord Stream pipeline launched last year and the planned South Stream pipeline project. [more]

Positions: 

Ivan Matiyeshyn, co-founder of the Ukrainian Foundation for Democracy “People First” said that the "intention of Ukrainian leadership to conclude a contract with RWE look doubtful as the supply of the indicated volumes won't change the situation significantly".

"Neither spot, nor liquefied gas is capable of overlapping all the needs of Ukraine and, what's more important, it can't have any influence upon the change of the price of Russian gas.  Gazprom will remain the basic gas supplier of Ukraine in the coming years. That's why Russia will hardly make concessions only due to the fact that Ukraine has got another supplier with such insignificant volumes. 

It would be more reasonable to concentrate on the issue of creation of a consortium which would consist of effective shareholders. Unfortunately, Ukraine can't consider itself a strong international player.  Therefore, in terms of energy-carriers diversification, Ukraine should concentrate on its own extraction and introduction of energy-saving technologies.  And the Ukrainian leadership should be interested precisely in the European experience in the first place."

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COMMENTS

  • The President of Ukraine has until Christmas to make up his mind about Russian gas and the Ukrainian gas pipeline. After that construction of the last part of the Russian pipeline system which bypasses Ukraine is scheduled to begin. And four years after that no Russian gas bound for Europe will pass through Ukrainian territory. So four years from now the value of the Ukrainian pipeline to Europe will be approximately zero. As will the Ukrainian transit fees paid by Russia.

    By :
    Babeouf
    - Posted on :
    13/03/2012
  • This is really a small amount of gas (approx. 1 bln m3/y). Probably it will be managed as a swap operation as physical delivery of gas in west-east direction would require considerably higher amounts.

    Anyway, if Russia managed to get a consent of Georgia with its WTO accession it surely can manage the issue of gas tranzit to Europe via Ukraine. Playing these games from both sides is just awkward macho politics.

    By :
    Otto Greberg
    - Posted on :
    14/03/2012
  • The South Stream gas pipeline will face problems unless it is of very high pressure.
    These pipelines have and need booster stations to move the gas along. The current pipelines have a booster pumping station about every 150Kms (94Mls).
    The south stream goes across the Black Sea for 800 – 1000Kms and the Russians haven’t built booster stations on the sea bed and there is only one pipe. So my guess is that Europe is going to be a mite short of gas when it gets cold!
    The same applies to the North Stream pipeline; which is also only one pipe.
    At the moment there are 4 pipelines across Ukraine to Europe and booster pumping stations positioned as are necessary.
    If Ukraine pipes are not used for Russian gas they can be used for gas from Kazakhstan, Azerbaijan and other eastern countries.
    The more Russia threatens Ukraine the more Ukraine will do to secure gas from elsewhere and it is doing that now – much to the anger of Russia.
    Russia is not the only ‘Gas game’ in town! Even if it thinks it is.
    Once Russia wakes up to the facts of reality it will be too late; because Europe and Ukraine will have secured gas deals with other countries including North African countries and then, who needs Russian gas? Only Russia!

    By :
    John
    - Posted on :
    15/03/2012

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