Ukraine Looks to EU to Help End Gas Dependency on Russia

Help from Europe in diversifying natural gas supplies would influence the price Ukraine pays for Russian gas, the country's Minister of Energy said at the 16th EU-Ukraine Summit in Brussels.

In the near future Ukraine could secure annual 30 billion cubic meters (bcm) gas supply from the west, via Poland and Slovakia, Eduard Stavitsky said. This would cover Ukraine’s annual domestic demand for gas, which would be supplied at the wholesale market price - not governed by the conditions Ukraine has found punitive under its contracts with Russia.

Currently, Ukraine buys most of its imported gas from Russia – 26 bcm in 2012, and a projected 20 bcm this year. In November 2012, Ukraine began importing gas from Germany.

Ukrainian media said the EU has given Kiev until May to accomplish political reform and show it would align itself with the bloc rather than Moscow.

At the summit, Stavitsky and the European Commissioner for Energy, Günther Oettinger, also signed a protocol on the modernization of the Ukrainian Gas Transporting System (GTS).

The European Commissioner suggested a trilateral consortium for managing the Ukrainian GTS. “In a month’s time we [Ukraine and EU] will hold a meeting [concerning the consortium] featuring the representatives of leading European companies and businesses of the Caspian region and USA,” Stavitsky said.

Last month, Poland reported its plans to invest €1.1 billion in the construction of gas pipelines, connecting the Baltic LNG terminal in Świnoujście with Ukraine, Czech Republic and Slovakia.

Reuters reports that Ukraine's relationship with funders such as the EU and International Monetary Fund could be complicated by Yanukovich's pledge to keep down gas prices for domestic customers. The IMF has insisted Ukraine should reduce the amount it spends on subsidising prices to cut its budget deficit.