Further Gas Cooperation to Benefit Both Moscow, Kiev – Russian Energy Minister

MOSCOW, June 20 (RIA Novosti) – Ukraine needs gas deliveries from Gazprom, while Russia is interested in reliable gas transit to Europe, making bilateral gas cooperation in the interests of both Moscow and Kiev, Russian Energy Minister Alexander Novak said in an interview with Forbes magazine.

“In general, the volume of gas that we deliver [to Ukraine] amounted to 25.6 billion cubic meters last year, which is of course a lot, and I think it would be right to continue cooperation in the field of fuel supplies. And, of course, Ukraine will not do without Russian gas. It’s not so easy to find 25 billion cubic meters of gas offered on the market,” Novak said.

“In addition, there is one more important thing: in winter, during peak consumption periods, European consumers, apart from primary gas supplies, need the gas stored in underground facilities in the western part of Ukraine. Therefore we are interested in further cooperation with Ukraine and gas transports,” the Russian minister added.

Starting Monday, Gazprom was forced to enact a prepayment system for gas deliveries to Ukraine after talks on the new price and debt payments mediated by EU Energy Commissioner Gunther Oettinger failed.

Ukraine’s gas debt to Russia has been building since 2013, when the country found itself amid a deep political crisis. According to the latest estimates, Ukraine owes Russia $4.46 billion in unpaid bills, and has been running up more debt at a rate of some $1 billion per month.

The gas negotiations between Moscow and Kiev have largely been dominated by Ukraine trying to leverage reliance on its gas pipelines in the disagreement over price changes for imported Russian gas, effective April 1, when Moscow cancelled two major discounts, raising the price to $485 per thousand cubic meters.

Russian gas giant Gazprom remains the key gas supplier to the European market, meeting more than a quarter of the EU’s total gas needs. The Ukrainian gas transportation system carries around 60 percent of Russia’s Europe-bound gas.

Under the 2010 deal, Ukraine was to provide Europe with extra gas volumes from its underground storage facilities in case of fluctuations in daily consumption on the European market. On Thursday, Gazprom confirmed the planned cancellation of the bilateral natural gas balancing agreement with Ukraine, saying it could cover fluctuations in daily European consumption on its own.

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