Ukraine is halting natural gas imports from Russia over price “aggression” before the world’s biggest exporter of the fuel cuts supplies, raising the risk of disrupted flows to Europe.
Ukraine will stop buying gas this month until a price agreement is reached, Energy Minister Yuri Prodan said in Kiev today. Russian President Vladimir Putin is scheduled to meet advisers and cabinet members to discuss energy cooperation with the neighboring country, which owes more than $2.2 billion for gas supplies through March.
About 15 percent of Europe’s supplies flow through Ukraine’s pipelines from Russia, making the country a linchpin in the continent’s energy security. Ukraine, which buys half its gas from Moscow-based OAO Gazprom, is seeking alternative supplies, including imports from Europe. Putin has used gas as a tool to pressure the government in Kiev to abandon attempts to reorient the economy toward the European Union.
“Europe can relax until September,” Alexander Paraschiy, an analyst at Concorde Capital in Kiev, said by phone. “If Poland and Hungary begin gas deliveries to Ukraine soon, like last year, Ukraine can survive without Russian gas and transit to Europe won’t suffer.”
Gazprom’s more than 80 percent gas price increase in April amounted to “aggression against Ukraine,” Prime Minister Arseniy Yatsenyuk said last week. The move threatens supplies to the country and transit shipments to Europe, Prodan said yesterday, according to Russia’s Interfax news service.
Analysts Michael Holland and Helima Croft discuss the latest impact on oil markets of the Russia-Ukraine crisis. Watch the video below
Ukraine plans to import fuel via Slovakia, using a pipeline in reverse, Prodan told reporters. While the plan is technically possible, pipeline officials from both countries will hold talks next week to clear remaining legal obstacles, he said.
“We have full backing from the EU,” Prodan said, citing talks with the EU energy commissioner yesterday. “It will help to solve question with reverse gas supplies from Slovakia.”
Russia canceled discounts it had offered to Kiev, raising the price to $485 per 1,000 cubic meters in two steps this month from $268.50 in the first quarter. Gazprom has said Ukraine may be moved to advance payments over its debt and will have to pay for deliveries to avoid a supply cut.
Ukraine, which is seeking financial aid from the International Monetary Fund, has not paid for March deliveries from Gazprom, Prodan said today.
Putin is discussing the “extraordinary” situation with Ukraine economic cooperation and gas during the government meeting, his spokesman said yesterday. Russia exported 549 million cubic meters of gas to Ukraine in the first week of April, according to the Russian Energy Ministry’s CDU-TEK unit.
Recommended for you
