Brussels, 21/05/2014 (Agence Europe) - In a second letter sent to Russia's President Vladimir Putin on Wednesday 21 May, European Commission President José Manuel Barroso has called on Russia to respect its commitment to continue supplying gas to Europe. Moscow is currently threatening to cut its supplies to Ukraine from 3 June.
In his letter, Barroso recalls that the trilateral discussions between Russia, Ukraine and the EU on the supply of Russian gas in connection with the Ukrainian debt to Russian gas company Gazprom were started in Warsaw on 2 May and are still ongoing between European Commissioner for Energy Günther Oettinger, and the Russian and Ukrainian ministers for energy - Alexander Novak and Yuriy Prodan respectively. “At the first meeting (…) held in Warsaw on 2 May, it was agreed to follow up with technical discussions, which started on 12 May, as well as with other further bilateral meetings between Commissioner Oettinger and his two counterparts from the Russian Federation and Ukraine”, Barroso states. The next trilateral ministerial meeting is due to take place in Berlin on 26 May - with the objective of reaching a solution to the Russian-Ukrainian gas dispute by the end of May.
“The discussions held have in particular covered the issue of the price for gas supplies to Ukraine and have established the willingness of the Government of Ukraine to pay the agreed-upon arrears. It is imperative that all sides continue to engage in this process constructively and also agree on a future price that reflects market conditions. As long as the trilateral talks are on-going, gas flows should not be interrupted. I count on the Russian Federation to maintain this commitment. It therefore continues to be Gazprom's responsibility to ensure the deliveries of the required volumes as agreed in the supply contracts with European companies. I also recall that the European Union expects the Russian Federation to activate the early warning system well in advance if ever the need arises”, Barroso writes, replying to Putin's second letter of 14 May to the leader of around 15 EU member states that are supplied with Russian gas from Gazprom (see EUROPE 11080).
In his second letter, Putin regretted not having received any concrete proposal from the EU for Ukraine to pay its gas bill to Gazprom - a bill that Ukraine has not paid for the last three months. Putin had called on the EU for more active involvement. Since 1 April, Russia has been demanding a price of US$485 per 1,000m3 of gas that it supplies to Ukraine - while Kiev wants to return to the US$268.5 per 1,000m3 price that was negotiated between Kiev and Moscow in mid-December before former Ukrainian president, Viktor Yanukovych, was deposed in February. Refusing to pay the new price demanded for Russian gas, Ukraine has still not settled its US$ 2.2 billion bill with Gazprom, which has built up over the last three months. Russia is now threatening to reduce its supply of gas to Ukraine if Ukraine does not pay in advance (payment in May for supplies in June). With May's advance payment, Ukraine's total bill now stands at US$3.5 billion. The EU, which imports 25% of its gas from Russia (half of which transits through Ukraine) does not want to run the risk of another disruption to its supplies of Russian gas - as happened during the Russian-Ukrainian gas disputes in 2006 and 2009.
In his letter, Barroso states that “a structural solution requires that all parties commit to ensure transparency and market opening in the Ukrainian gas sector, and transparent conditions for gas storage in, and gas transit via, Ukraine, for example by means of cooperation among all the Transmission System Operators involved and construction of the necessary gas metering stations at the Russian-Ukrainian border. In this regard, the European Union is prepared to provide actual data on the incoming gas flow from Ukraine. I count on both the Russian Federation and Ukraine to also commit in the short term to provide actual data on gas inflow and transit through Ukraine.” “It is the European Union's clear expectation that all sides will remain reliable and responsible supply and transit partners, which is also very much in their own interest. The European Union and other international donors have already provided significant support to Ukraine and will remain committed. I also expect a constructive approach from the Russian Federation to solve the issues at hand”, Barroso concludes, reaffirming the EU's readiness “to continue the substantive trilateral discussions, and to help find a rapid and sustainable solution acceptable to all parties”. (EH)