Ukraine Prepares For Gas War As Talks With Gazprom Drag On
Ukraine’s gas in storage reached 13 billion cubic meters as of June 22 as the country prepares for a worst-case scenario in which it loses its role as the main channel for Russian gas into Europe, state news agency Unian reported, noting the amount of gas represented 42 percent of storage capacity. This, according to Emerging Europe, is the highest amount of gas in storage in six years.
Russia has denied that it will cut off Ukraine from its gas transportation system—which would cause serious losses of transit fee revenues—but Kiev has insisted Moscow wants to do just that by expanding the Nord Stream pipeline. Currently, Gazprom and Naftogaz, which is the parent company of Ukrtransgaz, are negotiating the terms of their future transit dealings after they finally settled a court case in which both sides accused the other of wrongdoing.
Ukraine has been quick to warn of a looming gas crisis: the country’s deputy foreign minister Olena Zerkal said earlier this month, as quoted by Bloomberg, “While Russia holds off the negotiations on future contract, the gloomy scenario of a gas crisis shall be considered seriously. That is why every European nation, including Ukraine, is increasing gas stock in storage sites.”
The new deal needs to be negotiated by next January when the current contract expires. Russia’s Alexander Novak said talks are in the process of being scheduled for September and would involve Ukraine, Russia, and representatives of the European Union, which gets more than a third of its gas supply from Russia, most of it via Ukraine.
Also earlier this month, a Naftogaz official offered an alternative to the direct gas transit: he said Gazprom could sell the gas directly to Naftogaz at the Russian-Ukrainian border and then the Ukrainian company would sell it on to European states. Given that Gazprom has repeatedly accused Naftogaz of not paying its dues for the transit, the chances of the Russian major accepting this sort of deal are slim.
By Irina Slav for Oilprice.com