EU gas flows 'normal' despite Ukraine pipeline explosion

Ukraine's distribution firm, Naftogaz, said in a statement on Tuesday there is “smooth supply to consumers in Ukraine and transit to Europe” despite the incident.

The explosion occurred at 2.20pm local time on Tuesday on a part of the Urengoy-Uzhgorod-Pomary pipeline in the Poltava region in north-east Ukraine.

The underground pipe carries 28 billion cubic metres of gas a year from Russia to Ukraine, Slovakia, the Czech Republic, Austria, Germany, France, Switzerland, Slovenia and Italy.

Emergency services put out the fire at 4.15pm, while Naftogaz sealed off a 20km section of the system and “transferred gas flows to a parallel pipeline”.

Naftogaz CEO Andriy Kobolyev sai he solved the problem despite already facing “non-standard” conditions after Russia stopped deliveries on Monday in a price dispute.

Ukraine’s interior minister, Arsen Avakov, noted that the “key version of events is an act of terrorism” by Russia-backed rebels because local people “heard two strong claps that may indicate deliberate explosions” before the fire broke out.

With the incident taking place 10 days before the EU and Ukraine are to sign a trade treaty opposed by Russia, he added: “I recall that on the eve of the presidential election [on 25 May] we were warned of two attempted terrorist attacks on the Ukrainian gas transportation system”.

A Kiev-based diplomat from one EU country told EUobserver Russia’s motive could be to show the EU that Ukraine is an unreliable transit state in order to get the European Commission to lift its legal challenge to South Stream, a Russian pipeline project designed to bypass Ukraine.

He added that Ukraine might have blown it up itself in order to discredit Russia, however.

“[Russian company] Gazprom is financially dependent on Ukrainian transit to the EU, so its not in their interest to gravely disrupt supplies to Europe … If it doesn’t cause a long-term problem then I suspect Russia was behind it, but if it does, then I wouldn’t rule out Ukrainian involvement,” the source said.

Speaking to the Reuters news agency the same day, EU energy commissioner Gunther Oettinger said he hopes EU-brokered talks on the Russia-Ukraine price dispute would resume in mid-July.

“We are in June, so it's not really urgent today, but it's my concern and my ambition to use the summer time [to end the price row],” he noted.

He blamed Russia for not being "flexible” enough in the last round of talks.

Russia offered to supply gas to Ukraine for $385 per thousand cubic metres instead of its current price of $485.

But Ukraine is pushing for $326 and wants Russia to alter its 2009 gas supply contract to reflect any new deal in order to prevent it from increasing the price in future.

Gazprom’s average European price is $372.

But for his part, Michael Gonchar, a former Naftogaz executive, told this website the price should be $326 because Ukraine is geographically closer to Russia than most EU states and because spot prices for gas have fallen to some $300.

He added that Ukraine cannot start paying its multi-billion-euro gas debt to Russia while the price is in question because the size of the debt might go up or down.

“We have a military campaign against Ukraine on one front and we have another campaign on the energy front because [Russian leader Vladimir] Putin wants to exert the maximum pressure on Ukrainian authorities not to sign the [EU] trade agreement,” he said.

“Russia’s offer of a $100 ‘discount’ is unattractive because it could cancel this at any time based on a new government decision.”

Meanwhile, Putin and Ukrainian President Petro Poroshenko spoke by phone after the pipeline explosion.

Putin’s office said they discussed “the possible cessation of hostilities in south-east Ukraine”.

It added that Poroshenko expressed “condolences” on the death of two Russian journalists in the conflict zone, Igor Kornelyuk and Anton Voloshin from the Rossiya TV broadcaster, and promised to investigate what happened.