UPDATE3: Kiev stops gas purchases from Gazprom

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KIEV/MOSCOW, Nov 25 (PRIME) -- Ukraine’s government has ordered state-run energy holding Naftogaz Ukrainy to stop purchases of natural gas from Russian gas giant Gazprom as European gas is cheaper, Prime Minister Arseny Yatsenyuk said at a government meeting Wednesday.

“The government has decided to order Naftogaz to stop purchases of Russian gas…It was made in the first place because pricing proposals that came from our European partners are significantly better than (suggestions) from our eastern neighbor,” he said, adding that Ukraine has cut gas consumption by 20%.

Gazprom CEO Alexei Miller said the company has suspended supplies of natural gas to Ukraine until it makes the next payment.

“Today, as of 10.00 a.m. (Moscow time), Naftogaz Ukrainy has taken off the prepaid volume of Russian gas. A new prepayment has not come. There is no request for gas supplies filed by Naftogaz Ukrainy. So, the exports are suspended until the Ukrainian company transfers new payments,” he said.

Maxim Belyavsky, a spokesman for the country’s gas transportation system operator Ukrtransgaz, told PRIME that Ukraine is still waiting for 5 million cubic meters of gas from Russia on Wednesday. Kiev has imported almost 400 million cubic meters of gas from Russia in November, he added.

Miller said that Ukraine has already started taking gas from its underground storages actively before cold weather sets in, but storages had not been adequately filled in the first place.

“The abandonment of Russian gas purchases creates serious risks for reliable gas transit through the territory of Ukraine to Europe and for gas delivery to Ukrainian consumers during the upcoming winter,” he said.

But Naftogaz Ukrainy said quoting its CEO Andrei Kobolev that the company plans to resume purchases of Russian gas if necessary, depending on consumption and supply on the European market. Naftogaz Ukrainy will ensure a stable gas transit to the E.U. despite suspended purchases from Gazprom.

In September, Moscow, Brussels, and Kiev initialed an October–December agreement, under which Ukraine will finance Russian gas purchases with a $500 million aid from the E.U. and Russia will provide a discount of around $20 per 1,000 cubic meters. With the discount, the contracted gas price for the period stands at $227.36 per 1,000 cubic meters.

As of October 29, Ukraine’s total prepayment for gas supplies amounted to $518 million. The last prepayment on November 5 amounted to $24 million.

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