Russia, Ukraine play gas wars over prices, fines

Expert views ‘Nord Stream 2 as purely political project aimed at destruction of Ukrainian gas transit and delivering additional blow to our economy’

- Advertisement -

The long-standing gas conflict between Kiev and Moscow continued on January 22 with the head of Ukraine’s competition authority saying the regulator had decided to fine Russian gas giant Gazprom 85 billion hryvnias ($3.5 billion) for abusing its monopoly on the Ukrainian gas transit market. “A decision has been taken in relation to the abuse of the monopoly on the transit market … by Gazprom as a monopoly buyer. The amount of the fine is 85 billion hryvnia,” Yury Terentyev wrote on his Facebook page.

Gazprom this week said Ukraine owes the company $2.549 billion for gas supplied in the third quarter of last year and that the money should be paid within 10 days. Gazprom says that according to the “take-or-pay” terms of the contract, Kiev has to buy a minimum quantity of gas annually or face a penalty. Ukraine’s state-owned Naftogaz responded by calling the clause “unlawful and void”.

Gazprom’s claim followed Naftogaz’s decision to impose a 50%-plus increase in transit fees for exporting Russian gas across its territory to Europe.

“Ukraine decided to raise the transit fee for Russian gas transit via Ukraine to the normal international level and Russia responded with the charge, but notice, that previously we agreed with Kremlin the amendment to gas contract which basically cancelled take-or-pay method,” Igor Mantsurov, director of the Scientific Research Institute of Economics at Ukraine’s Ministry of Economic Development and Trade, told New Europe on January 21.

Meanwhile, Ukraine has filed an application for an increased gas supply from Slovakia in the amount of 37.04 million cubic metres for January 20. In addition, Ukraine may resume natural gas purchases in Russia in the wake of approaching frosts, Naftogaz CEO Andrey Kobolev said on January 19. Mantsurov added “winter seems much colder than we expected and, as a possible variant, we cannot absolutely exclude the option of negotiations with Russia on additional purchases of Russian gas”.

The EU receives about 40% of its Russian gas imports via Ukraine. Gazprom wants to build Nord Stream 2 to reduce its transit via Ukraine. The Nord Stream consortium has plans to double Nord Stream’s capacity with the construction of a third and fourth pipeline but some EU governments and Ukraine have spoken out against the plan. “We seriously view Nord Stream 2 as purely political project aimed at destruction of Ukrainian gas transit and delivering additional blow to our economy,” Mantsurov told New Europe.

Russia raised its gas exports to Germany via Nord Stream by 10% in 2015, its operator said on January 22. But at 39.1 billion cubic metres volumes remained well below Nord Stream’s capacity of 55 billion cubic metres. Gazprom owns a 51% stake in the Nord Stream consortium. Germany’s E.ON and BASF SE/Wintershall Holding each own 15.5%, while Dutch firm Gasunie and France’s Engie control 9% each. “We probably we need to define what type on interdependence we want with Russia,” an expert from France’s Foreign Ministry told New Europe. “In a way, we need energy security and, on the other hand, we don’t need to depend too much on Russia but Russia is very dependent of Europe as a customer so it’s also a very complex issue.”

follow on twitter @energyinsider

 

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

On the two-year anniversary, G7 Foreign Ministers address the devastating war in Sudan

After nearly 23 months of war, on March 21,...

Doom, gloom or boom?

While it is an almost painful daily task to...

Don't miss

On the two-year anniversary, G7 Foreign Ministers address the devastating war in Sudan

After nearly 23 months of war, on March 21,...

Doom, gloom or boom?

While it is an almost painful daily task to...

Romania utilizing all available resources to boost its energy independence

Romania is using all energy resources available, including natural...

Ahead of nuclear talks, Trump administration orders new sanctions on Iran’s shadow fleet and Chinese refiners

Washington’s sanctions campaign of “maximum pressure on Iran” is intensifying, despite the start of initial discussions between the U.S. and Iran over nuclear issues...

Romania utilizing all available resources to boost its energy independence

Romania is using all energy resources available, including natural gas as the country advances rapidly with Neptun Deep gas project and new wind and...

Germany removes key debt brake budget limits in historic move

Rushing to arrive at a workable arrangement before the new post-election German parliament convened on March 25, Friedrich Merz’s victorious CDU/CSU bloc and the...

Apollo Funds to partner with BP on TANAP gas pipeline from Azerbaijan to Turkey

British energy company BP said on March 21 it has reached agreements for Apollo-managed funds to purchase a 25 percent non-controlling stake in BP...

Caspian-Black Sea Green Energy Corridor countries push project forward

The Ministers of Azerbaijan, Georgia, Hungary and Romania met in Budapest on March 10, where they signed a joint letter to EU Energy Commissioner...

Ignoring Russia, latest Trump administration Iran sanctions increase pressure on an old enemy

On March 13, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned (“designated” in OFAC language) Iran’s Minister of Petroleum, Mohsen...

EU signs critical raw materials, energy and infrastructure deals with Kazakhstan

As part of the visit of EU Commissioner for International Partnerships Jozef Síkela to Astana, the European Union and Kazakhstan signed on March 13...

Weaning Europe off its Russian gas addiction

The Viking hero Ragnar Lodbrok once said “don't waste your time looking back. You're not going that way.” The words of the former king...