x Abu Dhabi, UAEWednesday 26 July 2017

Ukraine warns of gas disruptions

The Ukraine has warned the European Union to expect "serious problems" with gas deliveries by the middle of this month.

Ukraine has warned the EU to expect "serious problems" with gas deliveries by the middle of this month if Kiev and Moscow fail to settle their dispute over the fuel. The warning came after Russia cut all gas supplies to Ukraine on New Year's Day due to the neighbouring countries' failure to reach an agreement on payment and pricing issues by a year-end deadline. According to Bohdan Sokolovsky, a senior Ukrainian energy official, the disruptions would not be due to the Ukraine tapping into gas supplies in transit to other countries, but to low pressure in the pipelines transporting that gas. The pipelines shut down automatically if gas pressure is not maintained above a minimum level. "If the Russian side does not provide more gas than at the moment, then in around 10 days there could be very serious technical problems," Mr Sokolovsky said. "The transit of gas may be disrupted at some point. It will not be our fault." But Gazprom, the Russian state-controlled gas monopoly, accused Ukraine of stealing 35 million cubic metres per day of gas intended for Europe. "All the gas which was illegally taken will have to be paid for," the Gazprom deputy chairman, Alexander Medvedev, told reporters. Escalating the dispute, Gazprom said on Saturday it would sue the Ukrainian state gas company, Naftogaz, over the issue. The Russian company said it would file a legal challenge with the Stockholm arbitration court "to compel Naftogaz Ukraine to ensure uninterrupted transit of Russian gas to Europe via Ukrainian territory". It said the Russian president had approved the move. Far from siphoning off gas intended for Europe, Naftogaz claimed it had been using its own "technical gas" supplies to keep the transit gas flowing. Russia supplies Europe with about 25 per cent of its gas, mostly through Soviet-built pipelines in Ukraine. Since the start of the year, Bulgaria, Poland and Romania have all reported shortfalls in Russian gas deliveries. Gazprom said it was sending more gas to Europe through pipelines crossing Belarus and Turkey. "But the capacity to compensate has its limits," said Mr Medvedev. In Prague, the Czech deputy prime minister, Alexander Vondra, whose country took over the rotating EU presidency on Thursday, called for Russia and Ukraine to resolve their differences quickly, and for "an immediate resumption of full deliveries of gas to the EU member states". "We refuse to be part of this dispute," he said, adding that the EU was interested only in having its gas contract honoured. In an effort to defuse mounting European tensions over the gas standoff, Mr Vondra downplayed the situation's gravity. "There is no reason for being insecure over future deliveries; there is no reason for concern," he told reporters following a meeting with Mr Medvedev. Nonetheless, the Czech presidency has called for an extraordinary EU meeting in Brussels today to discuss the gas supply issue. On Thursday, EU foreign ministers will also discuss the dispute at an informal meeting in Prague. The EU is becoming increasingly nervous about its heavy reliance on Russian gas, in part due to the recurring threat of disruptions to supplies flowing through Ukraine. Russia previously shut off deliveries to its neighbour in Jan 2006, ostensibly over a pricing dispute. But many in the West interpreted the action as an attempt by the Kremlin to punish Kiev for adopting pro-western policies. On Saturday, Mr Sokolovsky accused Moscow of re-asserting political pressure on Ukraine by seeking to drive Naftogaz into debt. Mr Medvedev denied the claim and said the contract negotiations had been caught up in a political fight between Ukraine's prime minister and its president. On Jan 1, Gazprom withdrew an offer to sell Ukraine gas at US$250 per 1,000 cubic metres, and said the country must now pay a European market price of $418 per 1,000 cubic metres. Naftogaz had offered to pay $235 per 1,000 cubic metres. The Ukrainian company also said it was ready to return to a scrapped 2005 agreement allowing Gazprom to pay for transit rights with gas. tcarlisle@thenational.ae