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5 Jan, 2009 10:41

Europe to monitor Ukrainian gas transit?

As some European countries are reporting a drop in gas supply, Gazprom wants the EU to independently monitor the transit of gas through Ukraine. The Russian energy company blames Ukraine on illegally siphoning fuel.

However, Ukraine’s Naftogaz officials firmly deny Russia’s accusation and in turn point the finger at Moscow.

“The transit is not suffering but there are a number of technical difficulties,” said Valentin Zemlyansky, a spokesperson for Naftogaz. “Mainly because a new agreement hasn’t been signed with Gazprom. We can not pay the customs fees without it and the transport systems of Russia, Ukraine, and the EU aren't synchronized.”

In the course of earlier negotiations, Ukraine disliked Russia’s offer of $US 250 per 1,000 cubic metres of gas, which is almost half the market price.

In turn, Russia raised the price to a standard European market cost of US $418 per 1,000 cubic metres which Ukraine again declined.

With no agreement made by the New Year, Russia subsequently cut off gas supplies to Ukraine.

Kiev says that after Gazprom stopped the supplies, the transportation system started to break down.

Still, President Yushchenko’s advisor on energy security Bogdan Sokolovsky believes that they can maintain normal transit for less than two weeks.

“If Russia continues to hold back gas supplies to Ukraine, in just ten days there could be serious setbacks,” he said. “The transit to Europe could be seriously affected. Ukraine is not to blame.”

Some countries are already feeling the effects and are trying to find counter-measures.

“Yesterday, in fact, the supply of gas via Ukraine dropped by 11%. However, we quickly agreed with Gazprom to increase the transit via Belarus,” said Tadeus Abramovsky, head of the Polish National Gas Centre. “We have large reserves in our gas storage, so for Poland, in this situation, there is no threat.”

At the same time, Kiev says that unlike in 2006, when the residential sector was cut off, this time ordinary citizens will not feel the shortages.

“We’re not limiting anyone. All consumers have enough gas,” said the head of Naftogaz Oleg Dubina. “We have a large reserve – we manage to use 180 million cubic metres of gas every day. And Ukraine has got even more in store.”

So far, the cutoff of Russian gas supplies to Ukraine has only been felt on paper, which is why people on the street seem unconcerned with the dispute.

The quality of gas could be determined by its color when it burns. Blue means good, but should supplies diminish and pressure in pipes fall, the flame slowly becomes more yellow. For the time being, ordinary consumers in Ukraine have been enjoying the former.

Some allege that it’s because of the illegal siphoning of gas that Ukraine has enough fuel at its disposal. However, experts say it’s the world financial slowdown which saved some gas.

“Ukraine has experienced a downturn in the metals and chemicals sector – the two sectors that are consuming the most of the industrially consumed gas in this country,” said Irina Piontkovskaya, an economist in Troika Dialog Ukraine. “Our needs for gas are much lower than they were.”

This unused gas can in fact help the private sector. That’s why officials say the country has enough reserves to last until the end of winter.

It could also give Naftogaz a little more time to finally strike a good deal with Moscow. However, with negotiations in Moscow still resumed and with all the accusations, hardly anyone can tell if this will happen before Ukraine runs out of gas.