Gas transit to Europe under threat – Ukrainian Energy Minister

Gas price increases by Russia’s Gazprom are threatening Ukraine’s ability to maintain natural gas transit to Europe, the Ukrainian Energy Minister Yury Prodan warned Tuesday.

“In this situation there is a threat of cutting gas supplies to Ukraine and a corresponding threat to gas transit to Europe, because of Ukraine’s ability to maintain transit is not without limits,” Prodan said, as quoted by RIA Novosti.

Russia provides about a sixth of Europe's energy needs, and Gazprom, Russia’s largest producer of natural gas, ships nearly a third of the deliveries through Ukraine.

On Tuesday, a Gazprom spokesman said that gas exports to Europe via Ukraine remained stable despite the gas dispute, and in the past, CEO Aleksey Miller said he hopes to avoid a gas crisis with neighboring Ukraine and is committed to reliable deliveries to European clients.

Ukraine's Naftogaz missed its $2.2 billion payment to Gazprom, which was due at midnight on Monday April 7.

Over the weekend, Ukraine's interim Prime Minister Arseniy Yatsenyuk said Ukraine didn't accept Gazprom's new price of $485 per 1,000 cubic meters of natural gas, and would only pay $268 per 1,000 cubic meters, the discounted rate the Yanukovich-led government secured in December and was cancelled when the new government took over in Kiev.

Moscow turned off gas transit through Ukraine to Europe in the winter of 2006 and 2009 after Kiev failed to pay its Gazprom bill, leaving parts of Europe without energy during the winter months. Moscow has accused Ukraine of siphoning off supplies intended for Europe during these periods, an accusation Kiev refutes.

On Tuesday the EU and Ukrainian energy officials meet in Brussels to discuss energy security. High on the agenda will be tallying the levels of natural gas currently in storage across the European bloc.

The affect of an April shut-off would be far less damaging than the previous winter cuts.