Ukraine Concerned Over Falling Gas Volumes From Russia

Ukraine Concerned Over Falling Gas Volumes From Russia
# 07 November 2013 22:23 (UTC +04:00)

Baku-APA. Ukraine's deputy prime minister said Thursday that his government is unhappy at the drop in the amount of natural gas that Russia is delivering to Western Europe through Ukrainian pipelines, APA reports quoting RIA Novosti.

Gas deliveries have been the flashpoint of often testy relations between Moscow and Kiev, and the issue looks set to take center stage once again as Ukraine looks set to sign off on closer integration with the European Union later this month against Russia's express wishes.

Russian energy giant Gazprom pays Ukrainian state gas company Naftogas in advance for gas transit through Ukraine's pipelines. Ongoing Russian projects to develop alternative gas export routes could cause a liquidity crunch at Naftogas, which uses funds from Gazprom to buy its gas.

Ukrainian Deputy Prime Minister Yuriy Boyko said he was dissatisfied with how the quantity of Russian gas passing through his country has steadily been falling.

“We have contracts for the transit of Russian gas with which we fully comply," Ukrainian Deputy Prime Minister Yuriy Boyko told reporters.

The amount of Russian gas being transited through Ukraine decreased year-on-year by 0.4 percent, to 62.5 billion cubic meters, over the first three quarters of 2013.

In periods of peak demand, Naftogaz takes Russian gas being exported through its pipelines to supply customers living in the 900-kilometer-wide country's eastern border regions. It compensates for those volumes by exporting fuel kept in storage facilities in western territories.

Falling Russian volumes could stand to put that arrangement at risk.

Last week Russian Prime Minister Dmitry Medvedev said there was a crisis in Ukrainian-Russian energy relations, and demanded that Kiev pay an $882 million gas bill.

The angry rhetoric has sparked fears of a recurrence of 2006 and 2009 pricing disputes that saw Moscow temporarily shut off gas deliveries not just to Ukraine, but also to some EU countries.

Boyko said Thursday that Ukraine had paid 20 percent of the $882 million bill. But Gazprom complained earlier this week that it had received more “tears” than debt payments, Reuters reported.

Ukraine has been seeking to break its dependence on Russian natural gas. Boyko said Ukraine had succeeded in significantly reducing the amount of gas it buys from Russia by purchasing the fuel from European countries.

Relations between Moscow and Kiev are strained ahead of Ukraine’s plans to sign free-trade and association agreements with the European Union later this month.

The Kremlin has pushed Ukraine to join a Moscow-led Customs Union with Kazakhstan, Belarus and Russia.