Sechin Says EU Faces Ukraine Supply Risk

MOSCOW, Russia -- Deputy Prime Minister Igor Sechin warned the European Union's top energy official on Thursday that gas supplies to Europe through Ukraine could still break down because of limitations in the country's pipeline system.

Russian Deputy Prime Minister Igor Sechin.

Ukraine needs to buy 19.5 billion cubic meters of gas in the near future to make sure that flows to Europe remain uninterrupted, Sechin told EU Energy Commissioner Andris Piebalgs at the fourth EU-Russia Permanent Partnership Council on Energy.

"If this is not done, the tragedy that we lived through in January will develop catastrophically," Sechin said, Interfax reported. But Ukraine's outdated transit network might be unable to handle the increased volumes, he said.

The comments appeared to hammer home Russian frustration at initially being excluded from an EU-Ukraine agreement on modernizing the country's energy infrastructure.

Russia suspended exports through Ukraine for two weeks in January -- leading to widespread shortages in Europe -- after accusing Kiev of stealing "technical gas," which is used to power transmission stations. Ukraine denied the charge.

"I just want us to realize the existence of risks that continue to influence the gas transit situation," he said.

Piebalgs responded by urging against making a drama out of the problem.

Ukraine usually fills its gas reservoirs in the summer to prepare for winter consumption peaks in Europe.

The country pumped 800 million cubic meters of gas into storage in April, Prime Minister Yulia Tymoshenko said Thursday in Kiev. The statement came a day after she returned from Moscow, where she and Prime Minister Vladimir Putin agreed that Gazprom would pay an advance for transit fees to enable Ukraine to pay for the gas.

Ukraine transports 80 percent of Russia's gas sales to Europe.

Sechin said Russia was ready to help Ukraine pay for some of the technical gas and that it was considering state loans to help.

"When we say there's a problem, we also propose a solution. We have even agreed to co-financing," Sechin said.

Sechin also brought up the Energy Charter, restating Russia's disappointment with the treaty, which he said failed to regulate the dispute with Ukraine.

Adopted in 1991 and signed by 49 countries and the EU, the charter sets energy investment, trade and transit rules. Russia signed it in 1994 but never ratified the treaty, and Putin suggested last week that Russia could withdraw its signature. "The Energy Charter treaty has proved nonviable," Sechin said, according to excerpts of his speech on the Cabinet web site.

Piebalgs ruled out a proposal by President Dmitry Medvedev to replace the charter with a new treaty that would provide greater security to producers and include the coal and nuclear power industries under its auspices.

"The Energy Charter treaty will continue to live its life until the countries that established it decide differently," Piebalgs told reporters.

Source: The Moscow Times