Naftogaz urges EU to buy Russian gas at Ukraine’s eastern border

Ukraine’s gas transit monopoly Naftogaz released an Aug. 13 statement stressing that purchasing Russian natural gas at the Russian-Ukrainian border, instead of the Ukraine-EU border, will allow EU-based gas consumers to secure an uninterrupted supply of Russian gas. In which case, Russian gas monopoly Gazprom will not be able to cut gas supplies to EU consumers by blaming Ukraine for illegal siphoning of gas (as it did in the winter of 2009).



The release pointed out that a Gazprom subsidiary did not prolong its contract with Naftogaz to keep its gas on balance, which makes it impossible for the Ukrainian side to use gas from its underground storage to satisfy peak demands for gas in Europe this winter. The purchase of gas at the Russian border would also prevent EU consumers from gas cuts that could follow sanctions that Ukraine might impose against Gazprom. Naftogaz is willing to resolve the situation in trilateral negotiations, the statement said.



Alexander Paraschiy: The second reading of a sanctions bill is likely to be considered by Ukraine’s parliament on Aug. 14, and it will not necessarily lead to any interruption of Russian gas transit through EU, though such an option will be opened for Ukraine’s president (who heads the National Security Defense Council, the entity that would gain the authority to sanction Gazprom). The uncertainty regarding possible sanctions is being used by Naftogaz to promote its idea of Europe buying all its gas at the Russian border. Clearly, such a shift would benefit Naftogaz, which would be able to buy cheaper gas from EU gas giants directly on Ukrainian territory.



Currently, Naftogaz is pumping gas from the EU using reverse pipelines, a method that is complicated, expensive and does not cover Ukraine’s total gas needs. Thus far, we do not see any wish of EU-based operators to take advantage of such an opportunity, which would require changing all their contracts with Gazprom and would take a lot of time. On top of that, Western companies are unlikely to be willing to start new tough negotiations on gas pricing with Gazprom. Moreover, some of them may lose their profit as a result.

Источник: Конкорд Капитал