Monday

2nd May 2016

Russia to cut Ukraine, EU gas in 'next few days,' expert predicts

  • The commission said EU countries' gas reserves are high enough (Photo: net efekt)

Russia will cut gas flows to Ukraine "in the next few days," impacting EU countries, but only if the weather stays warm, a Ukrainian expert predicts.

Mihail Gonchar - a director of the Sevastopol-based think tank, Nomos, and a go-to source for EU diplomats in Ukraine - told EUobserver on Monday (28 January) that a huge invoice sent last week by Moscow to Kiev is the prelude to a new "gas war."

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"According to Russia's standard practice, we must expect an acceleration of events from their side. I mean, we must expect them to cut gas supplies in the next few days or next week at the latest," he said.

He noted that Russia's new Nord Stream pipeline to Germany means it can attack gas-transit-state Ukraine without hurting its main EU ally.

South-eastern EU states, such as Bulgaria and Romania, which depend on Ukrainian transit, would suffer. But Gonchar said Russian firm Gazprom lost so much money and credibility in the last gas war, in 2009, it will only take the step if the weather stays good enough for EU countries not to suffer too much.

"The warmer the weather, the more ready Gazprom will be to interrupt gas supplies to Ukraine ... We have very positive weather forecasts for now," he added.

The threat arose in a letter from Gazprom to Ukrainian distributor Naftogaz last week saying it must pay an extra $7 billion for last year.

Under a "take or pay" clause in a 2009 contract, Naftogaz must take a minimum amount of gas each year or pay for it anyway, but Ukraine's gas purchases have been down due to low industrial activity.

Russia had in past years assured Ukraine it would never invoke the fee.

But for Gonchar, Ukraine's recent decision to stay out of Russia's Customs Union and its plan to sign an EU association treaty later this year, prompted the Kremlin to take action.

Meanwhile, the $7 billion fee is also the same as a $7 billion valuation which Gazprom in the past put on Naftogaz' pipelines, a strategic asset which underpins Ukraine's economic independence.

"It [Russia] wants to interrupt Ukraine's movement toward the EU and to seize control of its transit pipelines ... It plans to say: 'If you cannot pays us what you owe, then we can always take these assets instead'," Gonchar said.

For his part, Bohdan Sokolovsky, a lecturer on energy security at Kiev University, believes Ukraine's decision last week to get moving on shale gas is also a factor.

"Ukraine has just signed a deal for exploration of shale gas reserves that could see it become independent of Russia in terms of energy imports in the next five to 10 years. It is also trying to buy gas directly from Azerbaijan and Turkmenistan ... It's not about stopping this or that deal. It's about general psychological pressure," he noted.

The European Commission on Monday said only that Russia and Ukraine must honour gas supply commitments and that EU countries have enough reserves for now.

But Ukraine's EU ambassador, Kostyantyn Yeliseyev, said it should do more.

"The EU has to make the situation better for Ukraine and to relieve the ever-stronger external pressure for it to abandon its sovereign European choice," he told this website.

He urged the EU to release money for renovating Naftogaz' pipelines and for macro-financial assistance, to lobby the International Monetary Fund to pay out more aid and to sign the EU-Ukraine association and trade pact as soon as possible.

The association treaty has been put on hold due to EU complaints that Ukraine jailed its former leader, Yulia Tymoshenko, for political reasons.

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