Energy 5 March, 2018 10:30 am   
COMMENTS: Mateusz Gibała

Naftogaz: Russian gas blackmail fails in Ukraine and serves as EU alarm call

Ukraine’s gas transmission system (GTS) was fully functional on the morning of 3 March after emergency measures taken by Ukraine and the country’s European partners helped to cancel out the potentially disastrous effects of a Russian failure to supply prepaid gas.

Additional gas imports from the EU have allowed Ukraine to compensate for the shortfall in trunk pipeline pressure caused by Gazprom’s sudden and unilateral violation of the gas supply and transit contracts with Naftogaz.

Ukrainian society also played a key role in helping the country to avoid an energy crisis, with citizens responding to calls from the Ukrainian authorities to join the #coolitdown initiative and turn their residential heating down by one degree. Coupled with security of supply measures implemented in commercial segment this led to a reduction of demand in Ukraine’s major cities by 14% on 2 March compared to the previous day.

Ukraine Overcomes Gazprom Blackmail

“We would like to thank everyone for their emphatic response to Russia’s latest attempt at gas blackmail,” said Naftogaz CEO Andriy Kobolyev. “We thank President Poroshenko, Prime Minister Groysman, Energy Minister Nasalyk, members of the National Security and Defense Council, local authorities and individual users for their rapid and constructive reaction to the challenges presented by Gazprom’s actions. We also deeply appreciate the efforts of our European partners who demonstrated their solidarity, allowing us to increase gas deliveries as a matter of urgency.”

The Naftogaz CEO singled out Ukrainian society for particular praise. “I would like to extend special thanks to Ukrainian society as a whole for the incredible levels of engagement displayed in support of our emergency initiative to turn down residential heating by one degree. This was an unprecedented national initiative made possible by popular participation and the support of the Ukrainian media. We now ask you to continue this initiative until 6 March. Each cubic meter of gas you save helps to defend Ukraine against the threat posed by Russia’s unpredictable behavior.”

No unilateral contract termination procedure; Naftogaz supports trilateral negotiations
Naftogaz has not received any documents from Gazprom regarding the Russian energy giant’s intention to terminate existing gas supply and transit contracts with Ukraine. These agreements remain effective and do not allow for unilateral termination.
Naftogaz welcomes the suggestion by the Ukrainian Ministry of Foreign Affairs and the European Commission to hold trilateral Ukraine-Russia-EU negotiations regarding the implementation of Stockholm arbitration awards. The company is ready to enter into negotiations as soon as convenient for all parties.

Transit via Ukraine remains intact

Ukraine’s GTS pipeline system continues to transit Russian gas to European customers despite the recent systematic failures by the Russian side to maintain the contractually stipulated requisite levels of pipeline pressure. Gas transit to the EU and Moldova was 264 mcm on 1 March, 265 mcm on 2 March, and 264 mcm on 3 March according to recent reports. At that, Gazprom failed to deliver to Naftogaz the prepaid 18 mcm/day of gas. This shortfall put gas supplies to Ukrainian consumers at risk.

“Maintaining secure transit is a top priority for us. I would like to thank the Ukrtransgaz team for maintaining the uninterrupted operation of Ukraine’s gas transit system under extreme conditions. Ukraine has not taken a single cubic meter of transit gas despite the critical situation caused by Gazprom,” said Kobolyev.

Alarm call for the EU

Initial international reaction to the gas showdown suggests Russia’s actions and statements made by Gazprom CEO Alexey Miller have seriously undermined Gazprom’s image within the EU as a reliable partner. According to numerous Western commentaries, Gazprom’s position is not in line with the spirit and practice of civilized commercial relations between suppliers and customers. This apparently overt use of gas supplies as a political weapon will likely provoke renewed debate in Germany over the wisdom of Berlin’s support for the Kremlin’s Nord Stream 2 pipeline project.

According to Naftogaz chief commercial officer Yuriy Vitrenko, Gazprom’s latest actions confirm that Naftogaz was correct to warn the European community over Russia’s use of gas supplies as a geopolitical weapon. “We hope that now it is more clear to the EU that it is a bad idea to build Nord Stream 2 or any other new “streams” with Gazprom,” said Yuriy Vitrenko.