Russia May Disrupt European Gas in Repeat of 2009, Naftogaz Says

Russia may disrupt winter gas supplies to Europe through Ukraine in a repeat of its action in 2009, the smaller nation’s state energy company said, as the conflict between the neighbors spills over into international trade.

“The transit is already threatened,” NAK Naftogaz Ukrainy Chief Executive Officer Andriy Kobolyev said today in a Bloomberg TV interview. “If we look back at 2009, then the transit was stopped with no reason. We believe that this situation might be repeated this winter.”

OAO Gazprom, the Russian export monopoly that has vowed to do all it can to keep Europe supplied, shut off gas for use by Ukraine on June 16 over a price and debt dispute. While fuel is still transiting through Ukraine to Europe, CEO Alexey Miller declined to say whether he would also end those shipments if Gazprom found the country was siphoning off its gas en route.

Russian supplies to the west via Ukraine were disrupted in January 2009 as Gazprom accused its neighbor of siphoning gas bound for the European Union, a charge denied by the former Soviet ally. More than 20 European states were affected, with 80 percent of Russian exports passing through Ukraine. Gazprom, boosting flows via Belarus and the Nord Stream pipeline, now ships about half of its gas to Europe through the country.

EU-bound gas, shut off for almost two weeks in 2009, has been proceeding normally so far. Russian officials have said there could be disruptions because of actions by Ukraine.

“From our experience we know that when autumn and winter come and Ukraine needs gas, they will -- excuse me for the well-worn word -- start stealing,” Sergei Ivanov, head of the Kremlin’s administration, said last month.

Escalating Conflict

Conflict between the two sides has escalated, with Russian President Vladimir Putin inviting U.S. and EU sanctions against his country by annexing Ukraine’s Crimean region. Ukraine is considering sanctions against Russian companies including Gazprom as the government in Kiev prepares to try to oust armed pro-Russian separatists in its east.

Ukraine is readying sanctions that may ban shipments from Gazprom in breach of a transit contract with Naftogaz and at the same time blames the Russian exporter, a Gazprom official said, asking not to be identified because of company policy.

Ukraine will allow European companies to bring Russian gas through its Soviet-era pipelines if a ban is imposed, Kobolyev said. Companies will be able to buy fuel at the Russian border in agreement with Gazprom and sign new transit contracts with Naftogaz, which doesn’t plan to raise transport rates, he said.

“Naftogaz’s idea that European gas companies could buy Russian gas at the Russian-Ukrainian border instead of getting it delivered through Ukraine requires a renegotiation of the transit contracts,” EU Energy Commissioner Guenther Oettinger said today in a statement. That can’t be done in the “short term” and the EU is working to set up trilateral talks in early autumn, he said.

Ukraine may cope without Russian gas through the winter if it gets enough so-called reverse gas flows from other European nations and cuts consumption as planned, Kobolyev said.

To contact the reporters on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net; Ryan Chilcote in London at rchilcote@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Tony Barrett, Torrey Clark

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