Ukraine Demands Changes to Gas Transit Deal with Russia

Energy | July 29, 2014, Tuesday // 14:46|  views

Photo by EPA/BGNES

Ukraine's state-owned utility Naftogaz has insisted that conditions of gas transit to Europe previously agreed with Russian concern Gazprom be revised.

"We have sent Gazprom a letter with the demand that the transit agreement be altered, and this process has already begun," Naftogaz executive Andriy Kobolev told the Ukrainian private channel ICTV, in an interview cited by UNIAN news agency.

Kiev believes methods for accounting the quantities of gas transited via Ukraine need changes.

Kobolev had earlier warned that the case might be referred to the Stockholm Chamber of Commerce's Arbitration Institute if Gazprom refused talks on that matter.

On Tuesday he said that Naftogaz hoped a breakthrough in negotiations could be reached by September.

Another case is pending at the Stockholm Arbitration Institute regarding prices Ukraine pays for Russian gas, after Kiev argued last month they values were not market-oriented. The Kiev leadership took the step to echo Gazprom's move after the latter introduced prepayment for Ukraine's gas over prolonged debts and referred a case to arbitration.

Amounts of Russian gas running through Ukrainian pipes have been dwindling over the past years, with 2013 levels of about 84 billion cubic meters being quite below the minimum of 110 bcm Russia is obliged to transport via the country's network.

Naftogaz's actions also come against the backdrop of an EU-Russia dispute over the South Stream gas pipeline project, with Brussels claiming it violates the bloc's Third Energy Package aimed at liberalization of supplies.

The infrastructural project leading gas into Central Europe bypasses Ukraine, and Kiev has insisted that the EU Commission put its efforts into stopping it.

Estimates of the Ukrainian utility suggest that if it is carried out and becomes operational, South Stream will reduce gas transit via Ukraine by 60 billion cubic meters on a yearly basis.

Kobolev told ICTV on Tuesday that Nord Stream provides substantial evidence for the trend, as its use to supply Germany with gas decreased deliveries through Ukraine by more than 40 bcm, down from 110-120 bcm every year.

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Tags: Naftogaz, Gazprom, Russia, Ukraine, Andriy Kobolev, Arbitration Institute, South stream, Nord Stream


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