Gazprom To Fill Ukraine Gas Pipes If Naftogaz Merger Goes Ahead

MOSCOW, Russia -- Gazprom CEO Alexei Miller said Monday that Russia would make maximum use of Ukraine's pipeline capacity and provide its neighbor with gas at Russian domestic prices if national energy company Naftogaz Ukrayiny agrees to a merger with the Russian gas giant.

Gazprom CEO Alexei Miller

"If the merger takes place, we'll load the Ukrainian gas transportation system to the maximum. If shipments currently are around 95 billion cubic meters [per year], it could transport some 120-125 Bcm," he said at a press conference, adding it could potentially carry up to 140 Bcm/year of gas.

"Russian industrial customers have much lower gas prices than their Ukrainian counterparts, so if Ukraine agrees to the merger with Gazprom it will receive a stimulus for economic development," Miller said.

The merger would not affect Gazprom's plans to build the South Stream pipeline, which is to supply Europe via a line that would bypass Ukraine, traveling from Russia to Bulgaria, Miller said.

Miller said that Ukraine's gas transportation infrastructure requires serious investment over the mid-term and so it should decide how to develop the industry soon.

"In the next seven years, Ukraine needs some Euro 6.5 billion ($8.88 billion), with Euro 3 billion as a minimum to keep the system functional, so Ukraine doesn't have much time to decide what direction it wants to go in," he said.

Miller added that Gazprom had boosted gas deliveries to Ukraine above its contracted volumes this winter because of the unseasonably cold weather.

Russia is pushing for an eventual merger of Gazprom and Naftogaz.

But Ukraine has so far rejected such a move first proposed by Russia's prime minister Vladimir Putin last April.

Source: Platts