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Page added on August 27, 2014

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Ukraine warns Europe of Russian gas cut-off, Moscow denies

Public Policy

* Russian, EU diplomats say Russian cut to EU is unlikely

* Russia halted gas flows to Ukraine in June

* EU, Ukrainian utilities try to prepare for winter disruption (Add comment from Kremlin spokesman paragraphs 10-11)

 

Ukraine warned Europe on Wednesday that Russia could cut off gas to the continent this winter, but Moscow responded that the supply of gas would continue regardless of politics.

Ukrainian Prime Minister Arseny Yatseniuk said Kiev knew of Russian plans to halt gas flows this winter to Europe, comments that were promptly denied by Russian Energy Minister Alexander Novak.

“The situation in (Ukraine’s) energy sector is difficult. We know of Russia’s plans to block (gas) transit even to European Union countries this winter, and that’s why their (EU) companies were given an order to pump gas into storage in Europe as fully as possible,” Yatseniuk told a government meeting, without disclosing how he knew about the Russian plans.

Russia has halted gas flows to Ukraine, a major transit route for EU gas, three times in the past decade in 2006, 2009 and since June this year because of price disputes with Kiev.

In the past Russia’s Gazprom has insisted it has been a reliable supplier to the European Union, its biggest market, and that flows to Europe were disrupted in 2006 and 2009 only after Ukraine took some of the gas intended for the EU to meet its own winter demand.

Ukraine’s warning came less than 24 hours after a meeting between Russian President Vladimir Putin, his Ukrainian counterpart Petro Poroshenko and Europe’s main energy diplomat, Guenther Oettinger, which included talks to secure Russian gas flows during the peak winter months.

Novak called Yatseniuk’s comment a “groundless attempt to intentionally mislead or misinform European consumers of Russian gas”.

He added, “We will put forth maximum efforts to fulfil gas contract obligations to European importers regardless of political issues in this or that transit country.”

Russia is open to “constructive dialogue” on energy with interested partners including Ukraine, he said.

Kremlin spokesman Dmitry Peskov said on Wednesday Russia is and will be a reliable supplier of natural gas to Europe.

“Russia was, is and will be a reliable supplier of energy resources to Europe,” Peskov told journalists, “We hope that Ukraine in turn will guarantee unhindered transit.”

A Russian ministry source said Ukraine would be more likely to start taking gas intended for the European Union to meet its own needs than Russia would be to cut off supplies to Europe.

Gazprom declined immediate comment.

SUPPLY TO UKRAINE HALTED

EU officials also say they do not expect Russia to cut off supplies to EU customers, which account for about 80 percent of Gazprom’s gas sales. But they say they have options if it does.

“We have a Plan B for the worst-case scenario. But we don’t expect to need it,” European Energy Commissioner Guenther Oettinger said in Ungheni, Moldova on Wednesday.

European and Ukrainian power and gas providers have been preparing for a potential Russian supply cut by injecting as much gas as possible into storage over the spring and summer seasons.

Preparations have also been made for Ukraine to import reverse flows of Russian gas from EU countries.

“The government has amassed 15 billion cubic metres (bcm) of gas in storage,” Yatseniuk said, and has plans to boost storage to 25 bcm.

“Europe now has 16.52 bcm (31.2 percent) more gas in storage compared to the same time last year,” research firm Energy Aspects said, but added that “based on recent average rates of injection, Ukraine will only fill its storage to around 52 percent of capacity come the start of withdrawal season”.

A lack of sufficient alternative supplies still means Ukraine and some central and southeastern European countries would not be able to cope with a winter gas cut without large-scale energy supply disruptions, analysts say.

RUSSIAN GAS IS KEY

Russia is Europe’s biggest supplier of oil, coal and natural gas, meeting around a third of demand for all those fuels, according to Eurostat data. It receives in return some $250 billion a year, or around two-thirds of government revenue.

While buyers can switch oil and coal suppliers relatively quickly and easily, Europe receives most of its gas through pipelines that are fed by only one supplier, Gazprom, in annual exports worth $80 billion.

“Our main concern, no doubt, is gas. We have ongoing … negotiations between the Russian Federation and Gazprom on one hand and Ukraine and (Ukraine’s gas company) Naftogaz and our European Commission,” Oettinger said after meetings from Tuesday through early Wednesday.

“On Friday we will be in Moscow for the next trilateral consultation between the Russian Federation/Gazprom and Ukraine/Naftogaz with the EU as a moderator of an important process,” he added.

The latest gas pricing dispute is closely intertwined with a bigger standoff between Moscow and Kiev.

Ukraine’s former Moscow-leaning president Viktor Yanukovich fled following weeks of street clashes by people angry that he had rejected an association agreement with the European Union and instead promised to boost cooperation with Russia.

Moscow subsequently annexed Ukraine’s Crimea peninsula in March, and pro-Moscow separatists have staged an insurgency in the east of the country.

The area where the fighting is concentrated, known as the Donbass, is a major source of coal for Ukraine.

Yatseniuk said the government has been trying to diversify coal supplies as “Russia and their mercenaries are bombing and destroying mines”. Russia has denied any involvement in the conflict.

Reuters



13 Comments on "Ukraine warns Europe of Russian gas cut-off, Moscow denies"

  1. Plantagenet on Wed, 27th Aug 2014 4:00 pm 

    Russia’s covert invasion of Ukraine seems to have entered a new phase, with the infiltration of tanks, cannons and Russian Army soldiers into a new front in SE Ukraine.

  2. Nigel on Wed, 27th Aug 2014 4:16 pm 

    If Russia truly had entered the war it would be over.

  3. JuanP on Wed, 27th Aug 2014 5:38 pm 

    I can’t wait for winter to be here to see how this crap plays out. I am very curious about it. The situation in the failed state of Ukraine keeps deteriorating daily, and the costs and destruction caused by their civil war increase to no end. This is going to be the winter of their lives for those soldiers on the battlefield and the people of Ukraine. The situation can only deteriorate, there is no improvement on the horizon.
    According to the UN, the number of casualties in Eastern Ukraine has more than doubled in the last few weeks since the downing of flight MH17. There is a major escalation of the fighting going on with both sides stuck and incurring heavy losses.
    Ukraine will be left bankrupt, failed, broken, and in precipitous decline in a soon collapsing world. They are the new leaders!

  4. nemteck on Wed, 27th Aug 2014 7:18 pm 

    The article is misleading. In the past, the Ukraine diverted gas from the EU allocation,triggering a Russian cut in delivery to the EU. Now the Ukraine may do just the same thing and tries to put the blame on Russia for delivering less to the EU.

  5. Makati1 on Wed, 27th Aug 2014 7:50 pm 

    Nigel, you are correct. If Russia had invaded as the Ukies claim, they would be in Kiev by now.

    The likely gas problem will be attempted theft by the Ukies when it gets cold. Maybe Mother Nature will settle this invasion by the US.

  6. Davy on Wed, 27th Aug 2014 8:11 pm 

    Juan, there are several tensions in play now that could blow the doors off BAU by winter. I don’t see a collapse but I see noticeable and significant deterioration. The global financial situation continues to darken. All we need is a confidence shaking event like what is happening in Ukr to light the fuse.

  7. clueless on Wed, 27th Aug 2014 10:00 pm 

    Russia will get the last laugh….again.

  8. MKohnen on Thu, 28th Aug 2014 2:05 am 

    I think it was Arthur (if it was someone else, please accept my apologies) who put me onto the site:
    http://slavyangrad.org/

    I find it very interesting, and if you put together shards of news from MSM, it pretty well confirms the reports being given by the militia. It sure explains why Poroshenko seems so anxious to make a peace deal now, but I think that ship has sailed.

  9. Davy on Thu, 28th Aug 2014 7:02 am 

    Great read MK. I think by spring Ukr will be a broken up state with east a dependent of Russia and west of the US/EU.

  10. JuanP on Thu, 28th Aug 2014 8:33 am 

    What a difference two weeks made on the Ukrainian battlefield! The operation mounted by the Kiev government to conquer all the rebel territories by Independence Day on August 24 has been a complete and total failure, costing the government most of its battle ready units. Kiev seems to be scraping the bottom of the barrel. I don’t think the Kiev junta can win after this defeat, they’ve lost too much.
    I always said taking the cities of Donetsk and Luhansk was impossible without perpetrating ethnic cleansing, genocide, and crimes against humanity. Urban guerrilla warfare is awful effective when defending your hometown in cities of over half a million.
    All over the world events are precipitating into a crisis. People say I am a pessimist because I expect things to get worse.
    This Ukraine mess could last a long time.

  11. Davy on Thu, 28th Aug 2014 11:01 am 

    Juan, the Russians are brilliant. But they did take a gamble. The Russians are brilliant because they have allowed the Ukr’s to deplete their best battle ready brigades. Now the Ukr’s are exhausted and demoralized. The gamble was the Ukr’s were moving towards victory. It is clear the Russians have been the benefactors and managers of this rebel force. You are also right Juan with the fact a conventional attack on a hostile population often in an urban environment is a difficult proposition even with the best armed armies. Ukr’s are done and the country will be broken up by Spring if not sooner.

  12. Northwest Resident on Thu, 28th Aug 2014 11:24 am 

    Davy — Back when the Ukraine fighting first started, I speculated that the ultimate goal was to divide Ukraine up into two or more chunks. Every once in a while my wild-assed speculations turn out to be correct, and it sure looks like I’m on track to getting this one right. It made sense back then to break up the Ukraine, and it still makes sense today. My theory is that Russia, Europe, China — they all know that global economic collapse and reset is heading down the pipeline, fast, and there are a lot of strategic maneuvers and repositioning of the deck chairs that need to be completed before that moment arrives. Ukraine was a tightly coiled spring of festering anger and ethnic tension. By starting up the fighting and symbolically lancing that boil now to release the pressure, there’s a good chance that TPTB will be able to stabilize Ukraine in broken up chunks and not have to deal with all the fighting later, when there will be plenty of other problems to deal with.

  13. JuanP on Thu, 28th Aug 2014 12:59 pm 

    The East Ukrainian rebels have reached the Azov Sea, and are in a position to attack Mariupol, but probably don’t have the men to do it at this time. If I were them I would focus on the Kiev forces they have surrounded in other places. It looks like Kiev should retreat a bit to consolidate, if they can’t rescue the surrounded forces, but they are too proud or stupid to do it. Kiev is overextended at this point.
    The rebels may try to go South along the coastline to Crimea and Odessa, providing the Russians with a corridor to drive supplies from Russia to Crimea by land. Karkiv could come back into play in the future, too. I think the rebels don’t have enough men for that at this time, but in winter those supply lines are going to feel very long and lonely to Kiev’s troops delivering supplies that far South.

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