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Russia, EU Reach Agreement on Ukraine Gas Supplies

  • Nothing too official yet but Russia Energy Minister think they have a deal
  • It's very simple. EU will give Ukraine a loan of $500 million which Kiev will spend on Russia gas
  • Russia will sell gas at a price comparable to that it offers Ukraine neigbors like Poland

This article originally appeared at The BRICS Post


Russia and the European Commission have reached a deal to ensure stable gas supplies to Ukraine and the European Union this winter, Russian Energy Minister Alexander Novak said in Vienna.

Novak met with the Vice-President of European Commission, Maros Sefcovic on Friday.

The meeting in Vienna was also attended by Alexey Miller, head of Russian energy giant Gazprom and addressed “issues of ensuring uninterrupted transit of Russian gas to Europe in the autumn-winter period, the implementation of Russian gas transmission projects in Europe” said a Russian Energy Ministry statement.

Officials from both sides confirmed an upcoming trilateral meeting with Russia, EU and Ukraine to finalise a new energy package. Moscow said this meeting could be as early as next week.

Following the meeting, Alexander Novak said Russia is ready to give Ukraine a price discount similar to the one it gives neighbouring countries, such as Poland.

The Russian gas discount will take into account the level of prices on the European spot markets.

According to preliminary estimates of Gazprom, the contract price for gas for Ukraine in the fourth quarter of 2015 is $252 per thousand cubic metres, said the Russian Energy Ministry.

The European Commission, in turn, said it might provide Kiev with $500 million for gas purchases of about 2 billion cubic metres (bcm), claimed the Russian Ministry. The commission did not comment on the figure.

Novak said that all participants in the consultations are interested in resuming supplies to Ukraine “as soon as possible.”

Ukrainian officials have previously stated about the need to ensure that gas reserves in underground storage facilities are held at 19 billion cubic meters.

More than a quarter of the EU’s total gas needs were met by Russian gas, and some 80 per cent of it came via Ukrainian pipelines.

“The EU is set to be dependent on Russian gas for some time and that’s the reality,” the International Energy Association’s executive director Maria van der Hoeven had told the European Commission in Brussels in December.

The EU has helped broker two interim deals between the countries after supplies to Ukrainian energy company NAK Naftogaz Ukrainy were halted for almost six months last year over a payment dispute with Russia’s OAO Gazprom.

While Ukraine can cope without Russian gas in the summer, it must boost imports to replenish stocks before the heating season.

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