Ukraine, Russia nearing new natural gas conflict

Gazprom CEO Alexey Miller reported that the Russian natural gas monopoly started supplying gas to Ukraine through the Prokhorovka and Platovo gas measurement stations that are connected to the regions in Donbas occupied by separatists, the Interfax news agency reported on Feb. 19. The daily volume of gas shipped though the listed stations is about 12 mcm.

In turn, Naftogaz CEO Andriy Kobolev told journalists that such supplies contradict their bilateral contract, which clearly stipulates the procedure of gas orders and shipments. In particular, the Ukrainian side is free to choose the direction of gas shipments from Russia and did not mention Prokhorovka and Platovo in its gas orders. Moreover, Ukraine has no technical possibility to measure the amount of gas supplied to the occupied territory, Kobolev said. He declared that Ukraine won’t pay for gas to be supplied from Russia to the occupied territories.

The Russian side will tally the amount of gas supplied to Ukraine “including, naturally, the volumes supplied for humanitarian purposes via alternative routes to DNR and LNR,” Russian Prime Minister Dmitry Medvedev reported to President Putin on Feb. 20. “With today’s supply volumes, including (the territory of) DNR (Donetsk People’s Republic) and LNR (Luhank People’s Republic), Ukrainian money will be only enough for a couple of days. Gas bills should be paid”, Medvedev wrote in his personal blog on Feb. 20, referring to Ukraine’s prepayment for Russian gas made in early February.

Alexander Paraschiy: With its “humanitarian supplies” of natural gas to “DNR and LNR,” Russia is initiating a new gas blockade for Ukraine. The Ukrainian government certainly won’t pay for gas supplied to terrorists, which will give Gazprom the pretext to stop gas shipments to all of Ukraine, citing lack of prepayments from Ukraine. The stoppage of gas supplies could happen already this week, despite Russia and Ukraine having agreed on special terms for gas supplies for the period of November 2014–March 2015.

To avoid a gas deficit, Ukraine will have to import about 4 bcm of gas from Russia during the rest of 2015. The “supplies of 12 mcm of gas per day to DNR and LNR” (which is hard to confirm, according to Naftogaz) would cost an additional USD 122 mln per month to Ukraine, which it simply can’t afford, particularly when it involves supporting its enemy.

Among the possible responses from the Ukrainian side to such blackmailing could be an appeal to the West to impose sanctions against Gazprom for providing the terrorists with natural gas. However, given the importance of Gazprom in the EU gas balance, such a move will unlikely be successful. All in all, the question remains open as to who will pay for the “humanitarian gas.”