Russia tells West reverse gas flows are ‘illegal’

A Gazprom building. Russia, 2013. [Thawt Hawthje/Flickr]

Gazprom’s CEO Alexei Miller said that gas reverse flows from EU countries to Ukraine are illegal, defying a Brussels plan to help the country’s pro-European government fight against Russia’s strategy to wreck its economy by increasing gas prices.

Miller reportedly stressed that reverse flows are often technically impossible and that in any case, the scheme was illegal. “We very much doubt whether reverse flow from Slovakia to, say, Donetsk, Kharkov or Kiev is physically possible”, Miller said in an interview with the Russian NTV channel.

Miller insisted that the pipe can’t have gas flowing in both directions at the same time”. He also noted that Ukraine had no right to control Gazprom gas in the Ukrainian pipe.

“Our terminals are in Europe. We will certainly look very carefully into that to see if this scheme is legal. I think this issue requires careful study and consideration. For example, I think that the European companies that plan to supply gas to Ukraine through such reverse flow should think twice whether such transactions are legal,” said Miller.

Ukraine receives reverse gas flows from Poland and Hungary and a similar scheme with Slovakia is close to completion.  Although this was basically Russian gas, it is still cheaper than the price of around $400 per thousand cubic metres (tcm) Kyiv was paying until the end of last year.

Ukrainian Prime Minister said on Saturday that Ukraine may get up to 20 billion cubic meters per year (bcm/y) of reverse gas from Slovakia, Poland and Hungary.

After former President Viktor Yanukovich refused to sign the EU-Ukraine Association Agreement and decided to develop relations with Russia instead, Gazprom brought down the price of its natural gas for Ukraine by a third – to $268 dollars per tcm.

But after Yanukovich fled the country and a new pro-European government took over, Gazprom raised the price by 80%, to $485 per tcm.

Multi-billion ‘debt’

In addition, Miller said Ukraine owed his company $11.4 billion due to the fact that Moscow was paying in advance for the stationing of the Black Sea fleet in Sevastopol after 2017.

Russia invaded Crimea and annexed the Ukrainian peninsula last month. The Sebastopol port is therefore seen by Moscow as Russian territory.

“Ukraine has been underpaying the Russian Federation $100 per 1,000 cubic meters. Since the signing of the Kharkiv Accords, this discount amounted to $11.4 billion,” he said.

Under the Kharkov agreement signed on April 30, 2010 Russia guaranteed Ukraine a $100 per 1,000 cubic meters gas discount in return for using the Sevastopol port to host its naval fleet.

According to Miller, as there were no Kharkiv accords anymore, the contract is void”

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