Brussels, 29/04/2014 (Agence Europe) - European Commissioner for Energy Günther Oettinger will meet the Russian and Ukrainian ministers for energy - Alexander Novak and Yuri Prodan respectively - in Warsaw on 2 May for trilateral consultations on energy security, the European Commission announced on Tuesday 29 April.
“The aim of the talks is to follow up the letter which President Barroso sent to President Putin on 17 April”, said the Commission in a press release. The Commission has agreed to conduct talks with Moscow and Kiev on the security of Russian gas supply in connection with Ukraine's debt of $2.2 billion to Russian gas company Gazprom.
Against a backdrop of crisis and political tension with Ukraine, the US and the EU, Russia's President Vladimir Putin has threatened - in a letter to the leaders of 18 EU member states - to reduce the supplies of Russian gas to Ukraine, through which half of EU supplies of Russian gas transits (65 billion m3 of the 133 billion m3 of Russian gas bought by the EU member states - in other words, 25% of EU consumption, according to data from the Commission for 2013), if Kiev does not honour its debt. This is an alarming decision for the EU, where several member states that are heavily dependent on Russian gas experienced disruption to their supplies in 2009 because of the Russian-Ukrainian gas dispute. Putin has given Kiev a month to settle its disagreement with Moscow - failing which, a move will be made to a system of pre-payment for supplies.
On Monday, Ukraine's Prime Minister Arseniy Yatsenyuk announced that Ukraine was ready to sue Russian gas company Gazprom, but that Ukraine was prepared to pay the total debt of $2.2 billion immediately provided that Gazprom brings its price down to $268.5 per 1,000 m3 compared with the current $485 price. This is a proposal that the energy company Naftogaz sent Gazprom at the beginning of April, but it has not yet received a response. The price of $268 was set in December, as part of an agreement between Moscow and Kiev, before the fall of pro-Russian president Viktor Yanukovych, who was ousted in February, and before the annexation of Crimea by Russia. Gazprom raised this price at the beginning of April - for the second half of the year.
Gazprom, for its part, believes that it now has grounds to ask for full advance payment for the gas it supplies to Ukraine. However, given the current state of its payments, requiring pre-payment from Ukraine would mean stopping supplies to Ukraine. To avoid a new gas transit crisis, the Ukrainian side will have to pay $4.9 billion by the end of May, said Russian news agency Interfax on Monday.
On the European side, the network of gas grid operators (ENTSO-G) has calculated that the EU can withstand a one-month total loss of Russian gas supplies through Ukraine without affecting EU storage levels for this winter. Nevertheless, a cut through Ukraine lasting all summer would hit storage levels in Bulgaria, Hungary, Poland and Romania, and Bulgaria would not be able to meet its gas demand in the second half of the summer.
In June, the European Council will examine a report on energy security which the Commission is due to prepare by that date, as part of the EU's efforts to reduce its dependence on Russian gas. (EH)