KIEV/LONDON: Ukraine is in emergency talks with European Union neighbours on the possibility of importing natural gas from the West, following a leap in the price it pays for Russian supplies, Prime Minister Arseny Yatseniuk said.
The urgency of securing affordable supplies has grown since Moscow — which annexed Crimea from Ukraine last month — raised its discounted gas tariff for Kiev twice this week, almost doubling it in three days.
Yatseniuk told reporters that one possibility was “reverse flows”, in which EU countries would send gas back down pipelines normally used in the transit of Russian supplies through Ukraine to the West. “We are carrying out emergency talks with our European partners. One way to solve the problem is reverse gas from EU countries,” he said, adding that the main candidates for imports were Slovakia, Hungary and Poland.
Ukraine, which is in an economic crisis, covers half its needs with Russian gas. However, relations between the countries became hostile after protesters ousted pro-Moscow president Viktor Yanukovich in February and Russia seized Crimea, leading to the worst East-West crisis since the Cold War.
Yatseniuk said it was possible to send gas down the pipelines in the opposite direction to the normal east-west flow. “On a technical level, the idea of reverse gas raises no problems, and we hope our European partners make the right decision. If it will be to reverse, then it means the price for gas will be $150 lower than Russian gas.”
Russia has raised the price to $485 per 1,000 cubic metres, meaning Gazprom, Russia’s monopoly gas exporter, charges Kiev about the same as other customers in central Europe. Ukraine will soon get money from the International Monetary Fund under a new loan package but faces large debts and its economy is in chaos.
The discounted price had been part of Moscow’s strategy of keeping Ukraine, a fellow former Soviet republic, under its political influence and discouraging Kiev from building closer ties with the EU. Yanukovich’s rejection of an EU trade and cooperation deal set off the protests that brought him down. Yatseniuk has called the price increases unacceptable and warned that he also expects Moscow to increase pressure on Kiev by limiting supplies.
In Washington, the White House said that US Vice President Joe Biden spoke to Yatseniuk by telephone on Friday. The White House said in a statement that Biden “emphasised the importance of improving Ukraine’s energy security and pledged to work closely with Ukraine and other countries across Europe to ensure that no country can use energy as a political weapon.”
Independent energy analyst Valentin Zemlyansky said: “At this price for gas, Ukraine will most likely continue to import and ratchet up its debt. It will happen until either side decides to go to arbitration or Russia decides to cut off deliveries of gas to Ukraine.”
“If it goes to the court, we could expect a very long ordeal, but if Gazprom cuts supplies, Ukraine will take gas from volumes intended for European consumers,” he said.
One source who advises on gas contracts noted that Russia offered the discount in 2010 in return for continuing use of its Black Sea naval base in the Crimean port of Sevastopol.
“With the seizure of Crimea, Moscow now could argue the rebate is no longer valid, hence raising the gas tariff to levels more normal in the region,” said the source. Reuters
