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Ukraine haggles with Slovakia for bigger gas shipments

Source: Reuters - Thu, 24 Apr 2014 18:44 GMT
Author: Reuters
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* Deal for to 10 bcm of gas capacity prepared

* Ukraine wants solution that would allow up to 30 bcm

* Slovakia says Russian consent needed

* EU commissioner says ready to talk with Russia (Adds quotes, Ukrainian minister seeking bigger supplies)

By Jan Lopatka

BRATISLAVA, April 24 (Reuters) - Ukraine could sign a deal on Monday allowing the shipment of up to 10 billion cubic metres (bcm) of gas a year from Slovakia, ministers from the two countries said, although Ukraine says its neighbour could pump three times that much.

Russia's seizure of Crimea from Ukraine has set off the most serious East-West rift since the end of the Cold War, resulting in EU and U.S. sanctions, mostly in the form of visa bans and asset freezes for a number of Russian officials.

Moscow has nearly doubled the natural gas price it charges Ukraine and threatened to cut gas supplies for non-payment of debt since a new pro-Western government took over in Kiev in February.

The crisis has also raised fears that gas supplies flowing to several European countries via Ukraine could be disrupted.

Speaking after three-party talks with Ukrainian and EU officials, Slovak Economy Minister Tomas Malatinsky said a deal allowing shipment of the gas via an unused pipeline between the two countries was almost ready.

"We believe that we will be able to make minor additions so it can be signed on Monday," he told reporters.

But Slovakia is refusing to allow bigger shipments -- up to 30 bcm per year - along the main international pipeline running from Russia, fearing that would break its contracts with Russian gas firm Gazprom.

European Energy Commissioner Guenther Oettinger supported that view, saying Slovakia had contractual obligations to Gazprom that must be taken into account.

"Legal analysis shows that on the basis of current contracts, the big solution is impossible without the agreement of Gazprom, and the small solution is possible without Gazprom's consent," Oettinger told reporters.

He said the EU would discuss the larger solution with Russia.

Ukraine's Energy Minister Yuri Prodan said what Slovakia is offering is not sufficient.

"There are technical possibilities, for shipments of up to 30 bcm, there are legal problems in contracts... we will look for compromises on Friday, Saturday, Sunday so we can sign the memorandum," he told reporters.

He said further talks would be held in Kiev in the coming days.

The European Commission said on Wednesday it was working on holding talks with Ukraine and Russia on a possible solution to Kiev's gas crisis, but no date has been set.

Russia provides Europe with roughly one third of its gas imports, about 40 percent of which flows via Ukraine, and delivers around half of Ukraine's domestic gas needs.

Moscow, which does not recognise the Ukrainian government that replaced ousted President Viktor Yanukovich in February, nearly doubled the gas price for Ukraine to $485 per 1,000 cubic metres, starting from April. Kiev, which is in deep financial trouble, refused to pay.

Prodan reiterated Kiev's view that what Russia is asking is unacceptable, and said Ukraine was prepared to go to courts to find a settlement.

He said Ukraine had offers from gas suppliers from Europe if the shipment bottlenecks are resolved.

Oettinger said the EU was backing Ukraine in seeking a "fair" price for its deliveries.

"We are supporting Ukraine in resolving certain open issues with the Russian Federation and Gazprom, with the aim to achieve fair prices for gas for Ukraine, with the aim to settle justified bills in the coming weeks and the aim of rejecting unjustified invoices." (editing by Keiron Henderson)

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