Ukraine, Russia indicate no concessions in natural gas talks

Макроэкономика 23.10.2014 The Ukrainian government is preparing to provide heating this winter season without Russian natural gas, with plans to cut consumption by 25% yoy to 26.7 bcm during the mid-October–mid-April period. Out of this amount 5.7 bcm will be imported from EU countries, 10 bcm will be produced internally, and the remaining (about 11 bcm) will be taken from underground storage facilities, which held 16.76 bcm of gas as of Oct 19, according to Serhiy Pereloma, a top manager at Naftogaz. Meanwhile, Russian Energy Minister Alexander Novak suggested that the supply of natural gas from the EU to Ukraine is sometimes “virtual,” the Ukrinform news agency reported on Oct. 22. Therefore, the Russian government suspects that Ukraine is confiscating some part of the Russian gas directed to the EU, instead of receiving it from EU countries, as claimed. There could be legal response from Gazprom against the Ukrainian government for such actions, Novak said. Alexander Paraschiy: Ukraine and Russia are trying to bolster their positions for the new round of gas negotiations that will take place in a week, while revealing no intention to make any concessions to each other. While Ukraine has based its plans on how to survive without Russian gas, and the officials are presenting it everywhere, Russia is thinking about how to undermine the weakest part of this plan. Ukraine’s plan will be hard to implement without gas exports from the EU. Yet with its business relations with all the EU countries that are capable of transporting gas to Ukraine, Gazprom is actively trying to undermine such arrangements. There is some chance that Ukraine and Russia will reach some deal on Oct. 29, while the bigger probability is that this issue won’t be resolved this winter season.