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5 Jan, 2009 23:33

Ukraine demands more for gas transit

Ukraine has warned it will be forced to charge Russia six times more to pipe gas into Europe. Meanwhile, Russia will cut the volume of gas supplied through Ukraine, because Kiev continues to siphon off gas.

A Kiev court has ruled that the current contract with Russia for the transit of gas is invalid. This comes as some European countries are reporting a drop in gas supply.

The lawsuit was filed by the Ukrainian Energy Ministry, to which the court gave its approval. The contract was signed by the head of Ukraine’s energy giant Naftogaz, who, according to the court, had no power to do so as he had not been authorised by the Cabinet.

At the current transit price Russia pays Ukraine $US 1.6 per 1,000 cubic metres for every hundred kilometres.

The head of the State Duma's International Affairs Committee, Konstantin Kosachev, has stated Ukraine has no legal basis and that only the International Court of Arbitration in Stockholm can decide on this matter.

“This is a decision that cannot be taken by a national court. If Naftogaz follows this decision, this will be a disaster for cooperation between Russia and other European countries,” Kosachev said.

Gazprom CEO Alexei Miller and Russian Prime Minister Vladimir Putin met on Monday to discuss the ongoing gas conflict. Gazprom say they will reduce gas supply through Ukraine by 65.3 million cubic metres starting Monday.

Europe concerned

An urgent EU meeting was held on Monday in Brussels to discuss the gas row between Russia and Ukraine.

Europe has called on both countries to come to terms as soon as possible and to safeguard gas supplies to European customers.

“The situation has not reached any critical point. European consumers have not been affected. There’s no immediate threat to them. A number of European states have report drops in pressure and in volume of gas supplies, but they have been able to make up for them through other suppliers and through their own stocks. However, we do feel that the situation is quite serious and the two sides need to come to a conclusion immediately, and they need to immediately resume gas supplies in accordance with their commitment,” Radek Honzak, spokesperson for the Czech permanent representation, told RT.

Tug of war

The Russian energy company Gazprom 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 cannot pay the customs fees without it and the transport systems of Russia, Ukraine and the EU aren't synchronised.”

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.”