Gazprom threatens to cut off gas to Ukraine

By bne IntelliNews February 26, 2015

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Russia is ready to halt gas supplies to Ukraine as of February 26 because its neighbour has not paid for March deliveries, Gazprom CEO Alexey Miller said on February 24, warning also of a possible knock-on impact on supplies to Europe.

Ukraine was extracting all it could from the current paid-for supply, with prepaid gas volumes now standing at 219mn cubic metres, according to the Gazprom chief. "Ukraine has not made a timely next prepayment for gas. As of today, only 219mn cubic metres of prepaid gas are left," he said. 

Miller noted that it takes about two days to transfer funds from Naftogaz to Gazprom accounts. If further gas withdrawal exceeded an existing application for 114mn cubic metres, this "will lead to a complete cessation of Russian gas supplies to Ukraine," he warned.

Miller also stressed that this situation created "serious risks for gas transit to Europe" through Ukraine.

On February 23, Naftogaz said that Gazprom had not fulfilled the Ukrainian application for the supply on the previous day of prepaid natural gas, which violated tripartite gas agreements negotiated in Brussels.

Instead of 114mn cubic metres of gas requested under the contract, Gazprom had supplied only 47mn cubic metres, the state-owned Ukrainian gas company claimed in a statement. "Naftogaz considers the failure to comply with the application as a violation of the gas supply contract between the companies and the tripartite legally binding protocol signed by Russian Energy Minister Alexander Novak, the European Commissioner for Energy Gunther Oettinger and Energy Minister Yuriy Prodan on October 30, 2014 in Brussels," the statement reads.

On February 23, Naftogaz handed a notice of breach of contract and a copy of the Brussels tripartite protocol to the Ukrainian Cabinet of Ministers, the European Commission and the Energy Community Secretariat as part of a rapid response procedure in the case of disputes.

On February 19, Naftogaz submitted an application for the supply of the 114mn cubic metres via the gas measuring stations Sudzha, Pysarivka, Sokhranovka, Valuiki, Kobrin and Mozyr.

Also on this date, according to the company, it made an advance payment for 454mn cubic metres of gas. At the start of business on February 23, the prepaid balance amounted to 287mn cubic metres of gas, Naftogaz says.

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