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 Kiev and Moscow are Once Again on the Verge of Gas War

Kiev has refused to form reserves of Russian gas to guarantee the supply to the EU.

The Russian monopoly noted that during the negotiations in Moscow head of the Energy Ministry Yuriy Boyko and Gazprom Chairman Aleksey Miller have discussed the pumping of gas into the Ukrainian undegroung gas storages (UGS). "Our Company specifically noted that availability of sufficient gas volumes in Ukrainian UGSs is a key condition of the Ukrainian side executing its obligations of gas transit", stated Gazprom.

Unofficially Gazprom says that Ukraine refuses to buy the necessary volume to fill up the UGSs. "We insist that 25 billion cubic meters have to be pumped. The Ukrainian side says that 20 will be enough. Gazprombak is prepared to provide an unprecedented loan for buying the additional volume but Ukraine is not prepared to do that", said the source.

Last winter Gazprom had trouble supplying its European consumers due to the fact that the Company refused to store their fuel reserves in Ukrainian UGSs. In July the parties agreed - Gazprombank (jointly owned by Gazprom) issued a 2 bln USD loan. For these funds the Ukrainian Company had to buy gas for pumping into the undeground storages, sell it next year to European consumers and earn additional funds. "The gas prices will only grow. We expect that in the II quarter they will go from 416 to 430 USD for a cubic meter. That is why it makes sense to buy 1 bln cubes at the current price and pump it into UGS", explained a high-ranking source in the Ukrainian Ministry.

However, later Naftogaz has abolished these plans - the Company decided not to take the loan and not to buy additional gas volumes. Gazprom was against reexport to the EU countries since Naftogaz does not consume the volume provisioned in the contract with Gazprom, said a source.

A high-ranking source in the Ministry said that by the end of August 16 1 billion cubic meters have been accumulated. "We plan to pump about 4 more until the heating season starts. This should be enough for uninterrupted transit if Russia does not decrease gas supply as it did last year due to severe colds. If Gazprom wants to insure themselves it can rent Ukrainian UGSs and store their fuel by paying rent. The Ukrainian party does not want to accomodate the Russian one since no cessions were made in the matter of price decrease or Russia's abandonement of alternative transfer routes", noted the source.

 
 
 
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