Ukraine invites EU monitors to prevent another gas crisis

Naftogaz CEO Andriy Kobolyev [European Commission]

Ukrainian gas company Naftogaz has asked the EU today (19 December) to send a monitoring mission immediately to entry and exit points of Ukraine’s gas transport system, in an effort to prevent another gas crisis.

Gazprom’s recent statements show Russia is probably preparing another gas crisis to pressure the EU, Ukrainian gas company Naftogaz warned in a statement released today.

Naftogas says that Gazprom’s recent statements about its readiness to cut gas supplies to the EU indicate that Russia might be planning a new gas crisis for January-February 2017, similar to those of 2006 and 2009.

Russian energy minister Alexander Novak warned of “new risks for European consumers” and denounced a $6.6 billion fine imposed by a court in Ukraine on his country’s gas export monopolist Gazprom as illegal.

Russia: ‘Illegal’ Ukrainian fining of Gazprom puts EU consumers at risk

Russian energy Minister Alexander Novak has called a $6.6 billion fine imposed by a court in Ukraine on his country’s gas export monopolist Gazprom illegal, and warned of “new risks for European consumers”.

Naftogaz says that the artificial gas crisis might be intended to generate pressure on the EU decision-making process related to Gazprom’s bypass pipelines, or the antitrust investigation currently in the works, helmed by the European Commission.

The planned pipeline projects aimed at bypassing Ukraine as a transit country are Nord Stream 2, which would double the transit of an existing offshore pipeline linking Russia to Germany under the Baltic Sea, and Turkish Stream, planned to bring Russian gas to the European territory of Turkey. So far Turkey receives Russian gas on its European territory via Ukraine, Moldova, Romania and Bulgaria.

It is likely that the Russian side intends to blame Ukraine for the crisis, Naftogaz says, expressing the hope that the Commission would send a monitoring mission shortly to obtain reliable first-hand data and to prevent possible negative developments.

Naftogaz says Ukraine has sufficient gas reserves and sources to satisfy needs of domestic customers during the entire heating season.

In contrast, Russia recently said that Ukraine wants to buy between 1.5 and 4 billion cubic meters of Russian gas during the current winter to secure its own needs, and also the transit of gas to Europe.

“Gazprom insists that Naftogaz should buy additional gas volumes from Russia. In the same time, the Russian monopoly rejects signing a standard supplementary agreement that removes critical purchase-related risks for the Ukrainian side”, the Ukrainian company stated.

According to Naftogaz, the supplementary agreement should say that Gazprom shall supply all gas prepaid by the Ukrainian company and ship it exclusively through pre-agreed entry points. The document should also waive the disputed take-or-pay provision and introduces a flexible payment procedure.

Gazprom demands $2.5 billion for gas Ukraine didn’t import

Russian gas giant Gazprom yesterday (19 January) fired off a new salvo in Moscow’s feud with Ukraine by demanding some $2.5 billion (€2.28 billion) for Kyiv allegedly breaching its supply contract.

“Naftogaz has never failed on its transit obligations, and Gazprom has provided no evidence of our alleged contract violations in either 2006 or 2009. However, our Russian counterparts have used their self-made crises to advance their interests. We confirm our commitment to fulfil our transit obligations in accordance with the contract and call for maximum transparency on the issue,” said Naftogaz CEO Andriy Kobolev.

Aiming to prevent the possible crisis, the Ukrainian side has addressed the European Commission and asked the executive to send an independent monitoring mission to entry and exit points of Ukraine’s gas transport system (GTS) used for Russian gas transit.

Naftogaz also points out that Gazprom has an obligation to maintain the contract pressure on the Russian side of the gas transmission system. The Ukrainian company deplores that because of Gazprom’s “systematic failure” on this obligation, Ukraine has to use more fuel to transit gas than in normal conditions.

“Naftogaz hopes that pressure inconsistencies on the Russian side of the GTS will be removed as a result of negotiations between the European Commission and Russia”, the company added.

For a third consecutive year, the EU is mediating between Ukraine and Russia in securing Ukraine’s gas purchases from Russia, which are also needed to secure the transit of Russian gas to the EU.

Sefcovic embarks on third trilateral gas talks on Ukraine

Vice-President for the Energy Union Maroš Šefčovič said he will visit Kyiv on 2 September to discuss energy reforms and lay the groundwork for trilateral talks with Ukraine and Russia that he hopes will help ensure uninterrupted gas supplies in the winter.

The European Union is eager to mediate between Kyiv and Moscow, because in 2006 and 2009, when Gazprom stopped deliveries to Kyiv, the country used gas destined for Europe for its own domestic consumption, and left several EU countries in the cold.

In the summer period, Ukraine’s underground gas storage needs to be filled, with the replenishment usually taking place until mid-October. The underground gas storage is needed not only for domestic use, but for ensuring transit.

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