Saturday, 25 February 2012

Gazprom wants to end gas transit via Ukraine

Russian gas giant Gazprom said on Feb. 22 it would aim to completely stop gas transit via Ukraine when it builds new pipelines later this decade as tensions between the two countries over gas prices and transit escalated.

Gazprom blamed Ukraine for shortages reported by its customers in Europe at the peak of a cold spell this month.

“Significant volumes of gas transhipped through Ukraine failed to reach Europe,” Gazprom Chief Executive Alexei Miller said at a meeting with Russian President Dmitry Medvedev, according to Medvedev’s office.

“On certain days, up to 40 million cubic meters of gas was kept in Ukraine and this, without doubt, incurred both financial and reputational losses on Gazprom.”

Ukrainian state energy company Naftogaz denied that. “Since the beginning of 2012, Naftogaz has not taken a single cubic metre of gas from the volumes that were shipped by Gazprom to Europe,” it said in a statement.

But citing worries over the security of transit, Medvedev ordered Gazprom to maximise the capacity of the planned South Stream pipeline across the Black Sea which will bypass Ukraine.

Gazprom plans to launch South Stream in 2015 with a capacity of 63 billion cubic metres (bcm) a year.

Coupled with Nord Stream, a pipeline through the Baltic Sea that Gazprom launched last year with plans to eventually double its capacity to 55 bcm a year, South Stream could allow Gazprom to drop Ukraine as a transit nation.

Russia shipped 104 bcm of gas through Ukrainian pipelines last year.

Moscow has accused Kyiv of siphoning gas bound for Europe in the past, most recently in early 2009, when the two ex-Soviet nations were locked in a bitter dispute over supply prices which briefly disrupted supplies to Europe.

Ukraine is also unhappy with the price of Russian gas it imports and has sought to renegotiate the price for over a year but the talks appear to have stalled.

This month, Russia said it had offered Ukraine a new gas deal, which according to media reports provides for a 10-percent price discount.

But Kyiv, which sees a fair price at $250 per thousand cubic meters, down from $416 it currently pays, has not commented on the offer.

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