Ukraine Calls for Cooperation as Russian Gas Supply Cuts Hurt EU Again

KIEV, Ukriane, February 6, 2012 /PRNewswire/ --

As Russia's Gazprom admitted that it had cut gas supplies to Europe at the height of the current cold spell, Ukraine said it is ready to help Russia deliver the necessary volumes of gas to Europe and called for greater European cooperation to modernise its gas transport infrastructure and improve energy security for the EU.

Italy, Austria and France were reporting cuts of as much as 30 percent of Russian gas over the weekend. Analysts have said that Ukraine, which as a transit country accounts for more than 70 percent of Russian gas shipments to the EU, is as much a victim of Moscow as the rest of Europe.

Gazprom Deputy Chief Andrey Kruglov was reported to be conferring with Prime Minister Vladimir Putin, who has in the past both threatened and implemented cuts to Ukraine and the EU.

Ukraine's Energy Minister Yuri Boiko was quoted by news agencies saying that shipments to Ukraine had fallen in recent days. Gazprom admitted this but claimed the reason was Russia's enhanced need because of the cold.

Ukrainian President Viktor Yanukovych meanwhile called on energy market participants to seek joint solutions for the future.

"We rely on our European partners, international financial institutions to implement the agreements on their participation in upgrading Ukraine's gas transportation system," the Ukrainian president said at the 48th Munich Security Conference on Friday.

He stressed that the situation showed the need for cooperation among all parties and respect for clear, transparent and fair rules of the game in the energy sector.  

There was a need to balance the interests of Ukraine as the main transit country, Russia as the main supplier, and the European Union as a consumer, President Yanukovych said.

In his speech at the Munich conference, the Ukrainian president also spoke of what he termed the one-sided conditions of the 2009 gas contract with Russia.  

In 2009, then Prime Minister Yulia Tymoshenko, signed a multi-billion and multi-year dollar gas deal with Vladimir Putin's Russia that is currently forcing Ukraine to pay more than $500 a cubic meter for Gazprom's supply of gas, even though world market prices are around $400 per cubic meter.  

Analysts in Washington are concerned that Russia may be using its Gazprom supplies to pressure Ukraine to submit to closer Soviet-style ties.  

They fear that Moscow may try and use its energy supplies and pricing to stop President Yanukovych from his announced aim of signing an Association Agreement with the EU and developing closer ties with Europe.

The recent trial and conviction of Opposition leader Yulia Tymoshenko, who was herself a one-time business partner of Russia in the natural gas sector, focussed on her signing of the high-priced 2009 deal with Gazprom without any Cabinet consultation when she was Prime Minister.  

It was that same deal which today is causing Ukraine to find itself in financial difficulty and a potential hostage of Moscow's leverage.