Gazprom warns Europe about Ukrainian gas transit

MOSCOW: Russian gas export monopoly Gazprom ratcheted up the pressure on Ukraine in a gas pricing dispute, saying its western neighbor did not have enough gas in its reservoirs to ensure safe transit of the fuel to Europe this winter.
Deputy Chief Executive Officer Vitaly Markelov said on Thursday that the gas storage situation in Ukraine was a “catastrophe” despite Kiev’s assurances that there would be no repeat of the supply disruptions of 2006 and 2009.
“Our Ukrainian colleagues pumped only 17.6 billion cubic meters (bcm) into underground storage, which is way too low ... In a situation like this, gas transit from Russia in winter is impossible,” Markelov said.
Ukraine’s Energy Ministry and its state-owned energy firm Naftogaz could not immediately be reached for comment. But Kiev said earlier this week it had enough gas in its reservoirs to ensure the flow to Europe remained unaffected.
It said it had about 19 bcm of gas in underground storage vaults as of the end of October.
Replenishing gas held in underground caverns is vital to supplement production and ensure that peak levels of heating demand can be met during the coldest time of the year.
Ukraine, through which Russia supplies around half of its gas exports to Europe, has asked Moscow to cut gas prices, calling them “exorbitant”.
Kiev pays around $400 per 1,000 cubic meters of Russian gas — one of the highest prices in Europe and a burden which weighs heavily on its debt-strapped economy. It has been steadily reducing its Russian gas intake.
A meeting between Gazprom CEO Alexei Miller and Evgen Bakulin, head of Naftogaz, ended without result on Thursday. “They discussed the problems. No decision yet,” said a Gazprom spokesman.
Earlier this month, Naftogaz said it had halted Russian gas purchases, while Gazprom said the company had not been paying for its gas in full.
Gazprom’s Chief Financial Officer Andrei Kruglov said on Thursday that Ukraine’s outstanding debts for gas deliveries total over $1.3 billion.
The decision by Naftogaz last Friday to suspend imports sparked fears of a possible new dispute that might also affect supplies of Russian gas to Europe.
Earlier on Thursday, Gazprom revealed its second-quarter financial results, which beat expectations, and increased its guidance for full-year core profit by 10 percent to over $55 billion on the back of rising exports to Europe where it generates more than a half of its revenues.
Gazprom’s shares ended the trading session up 2.48 percent, outperforming the broader Moscow market, which rose by 1.64 percent.
The company said the average price in Europe for 1,000 cubic meters of its gas edged up 1 percent to $385 in the January-June period, compared with the same period a year before.