Ukraine suspends purchase of Russian natural gas

Kiev, July 1 (IANS) Ukraine’s state gas company Naftogaz suspended all purchases of Russian natural gas from Gazprom starting on Wednesday, as no agreement was reached regarding supply conditions and prices.

The decision was announced after unsuccessful negotiations in Vienna came to an end on Tuesday between representatives from Ukraine, Russia and the European Commission on the transit of Russian natural gas through Ukraine to western Europe, Efe news agency reported.

However, Naftogaz said in a statement that “the transit of gas through the Ukrainian territory to Gazprom customers in Europe under the existing contracts will continue in full”.

Certain conditions must be met to resume purchasing Russia gas, the Ukrainian gas company stated, namely reaching a provisional agreement on supply at least until the end of the first quarter of 2016.

At the same time, Naftogaz said that the dispute over prices and terms of supply, deemed unfair by Kiev, will be resolved definitively by the Court of Arbitration in Stockholm, which will likely issue a verdict in the fall.

After months of disagreement over purchase prices and transport of gas to Kiev from Moscow, the two countries reached a temporary agreement in October 2014 under European Union mediation.

At that time, Gazprom agreed to reduce Naftogaz’s price by up to $100, setting it at $248 per thousand cubic metres, far below the $485 rate that Moscow imposed on Kiev after the fall of the government of Viktor Yanukovych in February 2014.

On Tuesday, two days before the contract renewal talks and on the eve of the tripartite meeting in Vienna, the Russian government announced that for the third quarter of 2015, Ukraine would not receive the same discount rate, although the price of gas would remain around $247 per thousand cubic metres.

The drastic reduction of energy dependence on Russia has been declared as one of the strategic objectives of the Kiev government.

 

 

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