Ukraine increases Russian gas imports, braces for hike

KYIV/LONDON - Reuters

Gazprom has said that gas transit to Europe via Ukraine was normal, but it warned that it may raise prices for Kyiv. Company Photo

Ukraine has increased gas imports from Russia over the last few days, a spokesman for Ukraine’s gas transit monopoly said on March 3, amid warnings that state gas producer Gazprom might scrap a discount on prices.

As concerns grow over gas supplies after Russian President Vladimir Putin won parliamentary approval to invade Ukraine, analysts say Kyiv is trying to import as much gas as possible at the lower prices.
Moscow, has warned Kyiv it could lose the discount it currently gets from Gazprom due to Kyiv’s outstanding gas debt.

“We doubled our gas imports from Russia. We imported 45 million cubic metres of gas on March 1, 2014, compared with 20 million on March 1, 2013,” said Maxim Belyavsky, a spokesman for Ukraine’s gas transit monopoly Ukrtransgas.

Price hike looms

Ukraine is a major buyer of gas from Gazprom, which exported almost 26 bcm of gas to its neighbour last year, more than half of the 50.4 bcm it consumed.

Russian gas industry sources also said Ukrainian state energy company Naftogaz had imported 27.6 million cubic metres (mcm) on Feb. 26, 45.8 mcm on Feb. 27, 60 mcm on Feb. 28 and 44.5 mcm on March 1. This was compared with 28 mcm per day as of Feb. 24, according to two Russian industry sources.
Ukraine is also a key transit route for Russian gas to the European Union and Turkey, where Gazprom increased its supply share to 30 percent in 2013 by boosting exports to a historic high of 162.7 bcm.
More than half of that, or 86 bcm, went through Ukraine.

Russia has been accused of using gas as a way to pressure its neighbour, and in earlier price disputes in 2006 and 2009 Moscow has cut off supplies at the height of winter.

Gazprom says there has been no effect on transit from events in Ukraine, where the West says Russian troops have taken control of the southern Crimea peninsula, home to Russia’s Black Sea fleet and a large population of ethnic Russians.

Gazprom’s Deputy Chief Executive Alexander Medvedev said yesterday that transit would be at least 70 bcm this year.

But some analysts said the seizure of Crimea put the transit in jeopardy.“Vladimir Putin’s Crimean plan increases the risk of interruption of transit flows of Russian gas through Ukraine. Russian gas supplies via Ukraine can stop any day,” said Mikhail Korchemkin of U.S.-based consultancy East European Gas Analysis. “The heating season is ending, and Ukraine would be able to live on without any imports of Russian gas for about seven months. Gazprom would be losing about one-third of its monthly export revenue.” Andrei Kruglov, Gazprom’s chief financial officer, repeated warnings that the company may increase gas prices for Ukraine after Russia agreed in December to reduce it by about a third, to $268.50 per 1,000 cubic metres from around $400, which Ukraine had paid since 2009.