BEIRUT

World

Ukraine reassures public after Russian gas cut

Ukrainian Prime Minister Arseniy Yatsenyuk addresses the Parliament in Kiev on June 17, 2014 on the results of the gas talks with Russia. AFP PHOTO/ ANATOLII STEPANOV

KIEV: Ukraine rushed Tuesday to assure a jittery public it would not suffer from Russia’s latest gas cut and sent a team to Europe to bolster energy ties.

The delicate mission came as lawmakers prepared to call on Kiev to declare martial law in two separatist eastern regions where a 10-week insurgency has claimed over 320 lives.

The latest violence in the heavily Russified rust belt saw the border guard service report the injury of 31 soldiers in mortar fire attacks.

The pro-Russian uprising has threatened the survival of the ex-Soviet state and put East-West relations under intense pressure.

The Kremlin has denied fomenting the unrest. But its March seizure of Crimea and border troop movements were followed Monday by a fuel stoppage that Kiev called “another stage of Russia’s aggression against the Ukrainian state.”

The head of Ukraine’s indebted state energy firm Naftogaz said consumers – already facing unpopular social benefit cuts being adopted under the terms of a massive IMF rescue loan – would be shielded from Russia’s punitive step.

“I think that normal users will not be affected in any way,” Naftogaz chief Andriy Kobolev said.

Weeks of acrimonious debt and price negotiations broke up Monday with Russia walking away from a compromise solution proposed in Kiev by the European Union’s energy commissioner.

Ukraine receives half its gas from Russia and transports 15 percent of the fuel consumed in Europe – a dependence that has not diminished despite similar supply disruptions in 2006 and 2009.

Russia imposed the cut after Ukraine balked at making a $1.9-billion debt payment in protest of Moscow’s decision to nearly double Kiev’s rates in the wake of the February ouster of the country’s Kremlin-backed president.

A gas shortage is not expected to be felt in either Ukraine or Europe for several months.

Ukraine has bolstered its underground storage volumes, and analysts believe that Europe’s own reserves are nearly full.

But Kiev is seeking a longer-term solution that would eliminate a need to maintain an alliance with Russia to secure gas prices it can afford.

Prime Minister Arseniy Yatsenyuk Tuesday said a team headed by Kobolev and Energy Minister Yuriy Prodan was flying to Budapest to negotiate “reverse-flow” deliveries along pipelines now used for transporting Russian gas west.

“Our volumes of reverse-flow shipments are insufficient to provide Ukraine with gas. But when we start large-scale reverse supplies ... we will see real diversification,” he said.

But European utilities have for the most part refused to complicate their relations with Russian energy giant Gazprom by selling Russia’s own gas back to Ukraine at a price lower than that imposed on Kiev by Moscow.

European companies “do not have the right to do that,” Gazprom chief executive Alexei Miller told Russia’s RIA Novosti news agency Monday.

Ukraine’s new President Petro Poroshenko said Monday he hoped to impose a cease-fire once troops regained control of the Russian border and stopped the flow of arms and gunmen into the conflict zone.

The 48-year-old confectionery tycoon promised to accomplish that uneasy goal by the weekend and then to launch talks with peaceful separatists.

But lawmakers want him to go much further and declare martial law – a step Poroshenko has resisted out of fear of fanning pro-Russian sentiments in the east.

Parliament was expected to adopt a nonbinding motion calling on Poroshenko to take that emergency measure immediately.

But a separatist leader in the Donetsk region – the epicenter of fighting where militants Monday briefly seized a local central bank – said that no talks with Poroshenko were possible without Moscow’s direct involvement.

“The time for bilateral negotiations has passed,” Andriy Purgin told Russia’s Interfax news agency.

Most economists do not expect real gas negotiations with Russia to resume for several more months.

“We believe that the parties will renew negotiations closer to the autumn,” Moscow’s VTB Capital investment bank said.

But economists believe Kiev will face strong European pressure once gas supplies dwindle because EU nations do not want Ukraine to tap into shipments intended for Russia’s Western clients.

“Europe will be particularly concerned ... recalling the winter 2009, when Ukraine illegally used gas earmarked for Europe for its own purposes,” Moscow’s Alfa Bank economist Olga Petrova said.

 
A version of this article appeared in the print edition of The Daily Star on June 18, 2014, on page 11.

Recommended

Advertisement

Comments

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (http://bit.ly/vDisqus)

comments powered by Disqus
Summary

Ukraine rushed Tuesday to assure a jittery public it would not suffer from Russia's latest gas cut and sent a team to Europe to bolster energy ties.

Ukraine receives half its gas from Russia and transports 15 percent of the fuel consumed in Europe – a dependence that has not diminished despite similar supply disruptions in 2006 and 2009 .

Russia imposed the cut after Ukraine balked at making a $1.9-billion debt payment in protest of Moscow's decision to nearly double Kiev's rates in the wake of the February ouster of the country's Kremlin-backed president.

A gas shortage is not expected to be felt in either Ukraine or Europe for several months.

Most economists do not expect real gas negotiations with Russia to resume for several more months.

Economists believe Kiev will face strong European pressure once gas supplies dwindle because EU nations do not want Ukraine to tap into shipments intended for Russia's Western clients.


Advertisement

FOLLOW THIS ARTICLE

Interested in knowing more about this story?

Click here