A Review of the Nigerian Energy Industry

Russia tells EU gas supplies via Ukraine under no immediate threat

04 March 2018, Moscow/Kiev — Russia’s Energy Ministry said on Saturday that gas giant Gazprom’s intention to terminate contracts with Ukraine poses no immediate threat to natural gas supplies to Europe through Ukraine.

The issue of gas transit has intensified after the Russian group said on Friday it would end the contracts after a Stockholm arbitration court ordered it to pay more than $2.5 billion to Ukrainian energy firm Naftogaz.

Gazprom (GAZP.MM) said on Saturday it had started moves to terminate gas supply contracts with Naftogaz, though Kiev said there had so far been no impact on supplies through its pipelines to Europe.

Gazprom’s announcement marked an escalation in a long-running dispute between Moscow and Kiev, which has left Ukraine struggling to stay warm and which the EU has said could threaten gas flows across the continent.

Russia’s Energy Minister Alexander Novak told European Commission Vice-President Maros Sefcofic in a phone conversation that gas transit would not be at risk until Gazprom and Naftogaz fully terminated their agreement.

“Minister Novak assured that the gas transit from Russia to Europe is under no threat. The transit remains as reliable as in the past,” the ministry said.

Gazprom deputy CEO Alexander Medvedev said on Saturday the group had begun proceedings at the same court to carry out the terminations.

“We have started the procedure of terminating contracts with Ukraine’s Naftogaz,” Medvedev said.

Ukraine’s state-owned gas pipeline operator Ukrtransgaz said on Saturday it had had to take additional measures to ensure gas transit to European customers.

Ukrtransgaz spokesman Ihor Kravchyshyn said it had faced“a critical situation” as Russia had kept the pressure at the point connecting to the Ukrainian pipeline system at a low level – at least 20 percent below that required by transit contracts.

Ukrainian President Petro Poroshenko said on Saturday Ukraine saw an increase in gas supplies from Poland, Slovakia, and Hungary, which has fully offset the impact of Gazprom’s decision.

Gazprom had intended to resume gas supplies to Ukraine for the first time since late 2015 when Kiev started buying gas from Europe to try to cut its energy dependence on Moscow. But the Russian group canceled that plan on Friday.

*Vladimir Soldatkin & Natalia Zinets; Andrey Ostroukh; Editing: Andrew Bolton – Reuters

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