Publication Date : Friday 16 May 2014 16:46
EU urges companies to pump gas to Ukraine facilities – Report
The European Commission has encouraged European natural gas companies to buy and pump gas to storage facilities in Ukraine to help guarantee uninterrupted gas transit this winter, the Kommersant business daily said Friday, citing market sources.
Ukraine previously pumped gas to its underground gas storage facilities itself, but it has refused to pay for its current gas imports amid the deep political and economic crisis in the country.
Kiev, which owes $3.5 billion for Russian gas delivered over the last 16 months, has no funds to pay for the additional 8 billion cubic meters of gas, worth $4 billion, to be pumped to underground facilities.
At informal consultations, major European companies asked the European Commission, the EU’s powerful executive body, to provide political guarantees that the gas will not disappear after it is pumped to the storage facilities.
Brussels has failed to provide such guarantees, the report says. Experts believe that amid Kiev’s chronic non-payment for gas, EU businesses will inevitably take risks to secure the gas transit. “Such a position [of the European Commission] is not encouraging,” the source told the newspaper.
At talks with EU Energy Commissioner Gunther Oettinger, Ukraine Energy Minister Yuri Prodan confirmed that the country’s energy giant Naftogaz owns only half of 9 billion cubic meters of gas currently in storage, while the rest belongs to Ukrainian billionaire Dmitry Firtash’s Ostchem holding.
“Asked whether this gas amount could be used by Naftogaz if needed, the answer was: We will manage somehow to agree with Firtash,” one of the sources told Kommersant.
Another source told the newspaper that despite gas concerns, the European business will not take any particular steps in the upcoming month to solve the problem.
“Everyone is waiting for the results of the Ukrainian presidential elections, the polls in Europe and the shake-up of the European Commission,” the source said adding “no one wants to spend money.”
Russian President Vladimir Putin addressed world leaders on Thursday, raising concerns once again about Ukraine’s gas debt. The Russian leader stressed that the decision to introduce advance payments for deliveries of natural gas to Ukraine was a desperate measure, as “Gazprom has not received a single payment for the gas supplied to Ukraine, and the total debt has grown from $2.237 billion to $3.508 billion.”
Putin, however, stressed that Russia was still open for dialogue and urged the European countries and the European Commission to actively engage in joint efforts aimed at normalizing the situation in Ukraine.