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Ukraine Resumes Russia Gas Imports, Curbing European Supply Risk

Tuesday, 09 Dec 2014 06:42 AM

Ukraine began importing Russian gas for the first time in almost six months, reducing the temptation to siphon off fuel piped across the country to the rest of Europe during freezing winter months.

Ukraine will receive as much as 43.5 million cubic meters of natural gas a day for the coming month from OAO Gazprom, the Russian state exporter, Maxim Bilyavskiy, a spokesman for pipeline operator UkrTransGaz, said by phone. That's equal to about a fifth of the current needs for Ukraine, which has been getting supplies from Europe through so-called reverse flows.

Russia halted gas to Ukraine on June 16 over a price and debt dispute and with the souring of relations over the Russian annexation of Crimea and involvement in unrest in its neighbor. The European Union, relying on gas piped through Ukraine for 15 percent of its needs, brokered an interim deal in October to help avoid shortages seen in 2006 and 2009 during the winter.

The interim deal covers Gazprom deliveries through March, with a set price discount and debt-restructuring conditions. Ukraine also agreed to pay for Russian gas up front, handing over $378 million for 1 billion cubic meters last week.

Russia warned Europe in a meeting of energy chiefs on Aug. 29 that the region risked having gas supplies siphoned off in the winter if the payment dispute between the former Soviet allies wasn't resolved, an accusation that Ukraine rejected.

Ukraine may need at least another 3 billion cubic meters of its neighbor's fuel to last through the heating season, Russian Energy Minister Alexander Novak said yesterday.

Ukraine should pay out $1.65 billion of debt by the end of the month under the deal. Supplies may be halted again Jan. 1 if it doesn't pay the agreed amount, Novak said in October.

Gazprom rose 0.5 percent to 135.75 rubles by 1:30 p.m. in Moscow.

"Investors were pleased that Ukraine's gas supply valve is finally open," Alexander Kornilov, an Alfa Bank energy analyst in Moscow, said by phone. Still, "there are too many questions with the company's finances and future dividends."

Gazprom can't rule out cutting dividends if developments including on Ukrainian debt are negative, Alexander Ivannikov, first deputy head of the finance department, said in October.

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Ukraine began importing Russian gas for the first time in almost six months, reducing the temptation to siphon off fuel piped across the country to the rest of Europe during freezing winter months.
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Tuesday, 09 Dec 2014 06:42 AM
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