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27th Aug 2016

Russian gas supplies 'not guaranteed', EU commissioner warns

  • Guenther Oettinger at a press conference after meeting the Russian and Ukrainian energy ministers (Photo: European Commission)

A first mediation attempt by the EU between Russia and Ukraine on their gas price dispute on Friday (2 May) in Warsaw ended with no results other than the willingness to meet again.

"It is with concern that we see the security of supply for end consumers in EU and non-EU states like Ukraine is not guaranteed," EU energy commissioner Guenther Oettinger told press after the meeting.

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The energy ministers of Ukraine and Russia, for the first time at a table since the annexation of Crimea and the Russia-backed separatist movements in eastern Ukraine, decided to hold separate press points rather than join Oettinger in a common press conference.

Still, when asked about the atmosphere in the meeting, Oettinger responded that "we are all adults" and emphasised the willingness of both sides to meet again mid-May.

"The European Commission will stabilise Naftogaz [Ukraine's state-owned gas company] and Ukraine and will be a fair mediator for justified and fair gas prices," Oettinger said.

At the core of the current dispute is how much Ukraine owes and has to pay for current and future gas deliveries from Russia: 485 US dollars per cubic meter of gas as Gazprom demands or roughly half of it, the price Kiev used to pay before the political turmoil that started late last year.

For the Russian side, the price is "clear, set in the contract signed until 2019" and any negotiations are "odd".

Russian energy minister Alexander Novak told press after the meeting that Ukraine has not paid for any gas it imported in the last quarter of 2013 and the first three months of this year.

"There is a 16 May deadline when an invoice will be issued to pay for the gas by 31 May and to prepay for the consumption in June. If by June these payments are not made, Gazprom will have the possibility to restrict supplies to Ukraine," Novak said.

He added that European supplies should not be affected as they are paid for until September 2014. Any disruptions in gas flows to the EU during this time should only be blamed on Ukraine, if it "illegally" taps these supplies or diverts them to storage.

Novak also questioned plans by the EU to reverse the flow of gas and supply Ukraine with Russian gas via Slovakia.

"If such contracts are executed, we'll look at them very attentively and reserve our right to address courts and institutions of arbitration," he said.

As for Ukraine, its energy minister Yuriy Prodan said the doubling of the gas price by Russia was "discriminatory" and "abusive" and that Kiev will take the matter to the international court of arbitration in Stockholm.

"It is possible that in arbitration we can change the volume of our debt to Gazprom, possibly no debt at all," Prodan said.

He insisted that "Ukraine is a reliable partner, a transit country and it will fulfil all its obligations to its European partners."

Ukraine is the main transit country for Russian gas supplies to EU countries, with previous price disputes having translated into gas cuts at the height of cold winters, leaving citizens in Bulgaria and Slovakia in the cold.

The situation has since improved, with increased reserves and the capacity to reverse the gas flow from less-dependent EU countries to the ones totally relying on Russian imports.

But with pro-Russian separatists shooting down two Ukrainian helicopters and with Russian President Vladimir Putin declaring a Geneva peace deal "no longer valid", the chances of a solution to the gas dispute are low.

Slovakia's Fico goes to Russia

The Slovak prime minister, whose country currently chairs the EU council, will meet the Russian leader ahead of upcoming EU talks on Russia policy.

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