Gazprom To Help Ukraine Deal With Gas Shortages In 2005

KIEV, Ukraine -- Russia’s Gazprom will help Ukraine’s Neftegaz Ukraine find three to five billion cubic metres of gas to keep the country’s gas supplies stable in 2005.

“We can see that Ukraine has a shortage of gas and needs three to five billion cubic metres of gas,” Gazprom board deputy chairman Alexander Ryazanov said on Monday.

Gazprom Headquarters in Moscow

“We will help our Ukrainian partners find this gas. But I would like this help to be reciprocal, so that we could solve questions connected with gas in underground storage facilities,” he said.

The two companies had decided earlier to consider the possibility of using Central Asia gas from Turkmenistan, Uzbekistan, and Kazakhstan to make up for the shortage. “I think it would be better and cheaper for Ukraine than to buy additional gas in Russia,” Ryazanov said.

Gazprom and Neftegaz set up a working group to deal with 7.8 billion cubic metres of gas currently held in Ukrainian underground storage facilities.

According to Rauyzanov, the gas is stored in 12 different places, and Neftegaz plans to use it during the next two winters. “But this is unacceptable to us,” he said.

Gazprom insists that this gas be considered a payment for the transit of Russian natural gas to Europe through Ukraine. However Neftegaz objects, saying this will break the country’s gas balance.

Earlier, Ukraine’s First Deputy Fuel and Energy Minister Alexei Ivchenko, who is the Neftegaz board chairman, said his company would insist that Gazprom pay for the transit of gas to Europe through Ukraine till 2013 with gas, not cash, as provided for in the bilateral agreement.

He told journalists after talks with Gazprom CEO Alexei Miller that the Russian side had first offered to pay for the transit with gas at a meeting of the two countries’ presidents who decided to work on this issue “some other time”.

Asked what will happen if Gazprom withdraws from the agreement unilaterally, Ivchenko said, “The consequences will be deplorable not for Ukraine but for Russia”.

“It is my deep conviction that the Russian side is not going to break the contract unilaterally,” he said, adding, “In this case Russia will have to deal not with Ukraine but with European companies that use Russian gas and that have bilateral obligations with Gazprom for dozens of years.”

If Gazprom backtracks on the agreement, Neftegaz Ukrainy will buy gas from other countries, Ivchenko warned. “It may so happen that we will not buy Russian gas at all,” he said.

In 2002-2004, Neftegaz Ukrainy received 23-26 billion cubic metres of Russian natural gas annually from Gazprom as payment for transit. The price of the Russian gas was 50 U.S. dollars per 1,000 cubic metres, and the transit tariff was 1.09 U.S. dollars per 1,000 cubic metres for 100 kilometres.

In 2005, Russia will supply 23 billion cubic metres of gas to Ukraine.

Source: ITAR-Tass