Thursday

28th Oct 2021

Ukraine failing to meet EU conditions for gas loan

  • Gas meter: The 20 percent hike has fallen victim to Ukraine's political scene (Photo: eastpole)

There is no risk of a fresh gas supply crisis in the coming winter despite Ukraine's inability to meet the conditions of an EU-brokered loan for its ailing national gas company, a senior Ukrainian official has said.

"Right now, Ukraine is ready to pump gas to European customers. We have enough gas in our underground storage tanks to ensure supplies for the winter of 2009 and 2010," Ukraine's top official in charge of energy security, Bohdan Sokolovsky, told EUobserver in a phone interview on Tuesday (6 October).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"But if the financial situation of Naftogaz does not improve, there could be a problem in 2010 and 2011," he added.

Mr Sokolovsky's remarks come after an EU-led delegation to Kiev last week said international banks will not pay out a €1.2 billion loan designed to prop up the gas company's finances until the country moves forward on agreed reforms.

The EU in July helped put together the financial assistance from the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank.

But European Commission official Hugues Mingarelli in Kiev last Friday told Mr Sokolovsky that the funds will not be released unless Naftogaz first raises domestic consumer prices by 20 percent and takes steps to separate its transit and domestic distribution businesses.

The Ukrainian official blamed the impasse on Ukraine Prime Minister Yulia Tymoshenko's unwillingness to raise prices ahead of her bid in the January 2010 presidential elections.

Ms Tymoshenko needs to put forward a social package to help impoverished consumers shoulder the price hikes in order for Ukrainian courts to approve the 20 percent increase. But the prime minister has refused to do so, he explained.

"These gas price increases would not help her in the elections," said Mr Sokolovsky, a loyalist of Ukrainian President Viktor Yushchenko. "Yulia Tymoshenko is blocking the price reforms."

Naftogaz' perilous financial situation is linked to its "take-or-pay" contract with Russian supplier Gazprom under which the Ukrainian firm has agreed to buy set volumes per month despite a sharp dip in demand due to the economic crisis.

Gazprom chief Alexey Miller at a gas industry congress in Buenos Aires on Tuesday defended take-or-pay deals, saying "this system guarantees the sustainability of gas supply for importers and consumers, and is a crucial element of energy security."

He also said that the Russian firm will start up two pipelines, Nord Stream and South Stream, designed to reduce Ukraine's importance as an EU transit country, in 2011 and 2015, respectively.

Ukraine currently transits 80 percent of Russia's gas shipments to Europe. A Russia-Ukraine gas price dispute last winter caused mass-scale interruptions to EU supplies costing hundreds of millions of euros in unrecoverable economic damage.

Analysis

COP26 climate summit: could it be different this time?

World leaders and national negotiators from almost 200 countries will meet in Glasgow next month to discuss global cooperation in response to the climate change emergency. What outcome can be expected? Why does it matter?

Revealed: EU migration plans for Morocco, Libya and others

Leaked commission documents, dated earlier this month, outline draft migration proposals on Afghanistan, Bosnia and Herzegovina, Libya, Morocco and Tunisia. They also provide insights into bilateral moves by individual EU states.

Opinion

Israel's besmirching of Palestine NGOs must be reversed

The designation perfectly fits into Israel's long-conceived strategy to besmirch Palestinian civil society voices under false allegations of terrorism and antisemitism, while pressuring any international actor that grants them a hearing, and actively demanding their defunding.

News in Brief

  1. France and UK on edge of fishing sanctions-war
  2. Israel agrees 3,000 more settler homes, despite EU criticism
  3. Italy blocks anti gay-bashing law after Vatican lobbying
  4. EU gives Moldova €60m amid Russia gas crunch
  5. Bulgaria risks full lockdown as Covid infections surge
  6. Irish goods traffic with EU grew 36 percent since Brexit
  7. Europeans want trains instead of short-haul flights
  8. Boom time for hackers in pandemic, EU agency warns

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. EU says No to patent-free vaccines for Africa
  2. COP26 climate summit: could it be different this time?
  3. EU top court orders Poland to pay €1m-a-day in rule-of-law row
  4. Revealed: EU migration plans for Morocco, Libya and others
  5. New EU banking rules ignore 'stranded assets', critics warn
  6. Israel's besmirching of Palestine NGOs must be reversed
  7. Environment ministers continue dogfight on energy price hike
  8. Most lawmakers unhappy with lead MEP's asylum bill

Join EUobserver

Support quality EU news

Join us