Get to the gas

Europe is finding out how much it costs to pump into underground storage facilities in Ukraine

Brussels multilateral consultations between representatives of Russia, Ukraine and the European Union on preventing another gas conflict ended yesterday with an official statement by the European Commission on progress in finding ways out of the crisis. Russian negotiators, led by Deputy Chairman of the Board of Gazprom Alexander Medvedev (pictured), refrained from making assessments in hot pursuit. According to sources familiar with the course of yesterday's events, representatives of the EU and international financial institutions invited delegates from Ukraine to provide data confirmed by international observers on the availability of gas in underground storage facilities and on the need for fuel injection to fulfill transit obligations. After receiving clear answers that potential creditors expect as soon as possible, the procedure for considering specific parameters of assistance can begin.

As Acting Minister of Finance of Ukraine Igor Umansky said, his country received from the European Commission some written proposals on gas problems, relating not only to Naftogaz. And a source in Brussels previously said that in exchange for help, Kyiv will be required to take active steps to reform the gas market, obviously within the framework of the bilateral declaration on the modernization of the Ukrainian gas transportation system signed in March. As you know, this document extremely angered Moscow and in many ways served as the starting point for active pressure on the EU in order to force Europeans to share the risks of political and economic instability in this transit country.

Speaking on condition of anonymity, an official in Brussels told Reuters that as a result of yesterday's consultations, Europeans are increasingly doubtful about the need to allocate the $4.2 billion initially announced by Moscow and Kiev to pay for gas to be pumped into underground gas storage facilities. “More like $2 billion, but the numbers may change, since only the Ukrainians know how much gas is in their storage facilities,” the agency’s source said. A Vremya Novostei source clarified that the Ukrainian delegation cited different figures. According to him, the idea of ​​an international audit of reserves was expressed and it was proposed to use the mechanism for monitoring the situation by independent observers, which was agreed upon at the tripartite intergovernmental level at the height of the last crisis in January. “For now, Kyiv is not going to let anyone into information,” the source stated. This means that the question of financial assistance is up in the air.

Representatives of Ukraine, who are usually happy to comment on the situation, were extremely restrained yesterday. “Today we are talking about the fact that a number of clarifications are needed both from the Ukrainian side and from the European side and the banks. We are talking about technical things, about agreeing on details - this is a necessary stage for decision-making,” emphasized Advisor to the President of Ukraine Bogdan Sokolovsky, who, together with the first deputy chairman of the board of Naftogaz Igor Didenko, headed the Ukrainian delegation. According to him, all parties agreed that they would not make specific information public until a specific decision was made.

Initially, Naftogaz’s need for a stable heating season was estimated at 19.5 billion cubic meters, worth about $4.8 billion. Since April, when Ukraine began pumping gas into underground gas storage facilities, about 3.5 billion cubic meters of gas have been sent to storage facilities. However, in the current situation, the rules of arithmetic do not work on the Ukrainian market, and this does not mean that another 16 billion cubic meters of gas need to be pumped in. Given the sharp drop in gas consumption in the country during the crisis (in the industrial sector, even according to official estimates, demand fell by 40%), the east of the country may need much less gas than expected. It is known that gas from storage facilities located mainly on the western border of Ukraine is intended to replace during the heating season the volumes that Naftogaz takes from the transit flow to meet the needs of the eastern regions. But the Ukrainian side has not yet provided convincing estimates of how much gas is needed.

According to the head of Gazprom Alexey Miller and the Prime Minister of Ukraine Yulia Tymoshenko, in June Naftogaz will not need funds from outside to pay for gas (since the company has completely stopped pumping into underground gas storage facilities since June 8). However, already in July, more than 4 billion cubic meters will have to be pumped in the amount of about $1 billion. The company and the Ukrainian government do not have that kind of money; the only hope is for outside help. The deadline for payment for July deliveries is August 7.

Alexey GRIVACHS