Region: Kyiv baits energy talks

By Richie Parrish

For the Post

With plans to loosen its ties with Russian energy giant Gazprom, Ukraine will look to alternative suppliers in an effort to relieve the country of its financial woes.

Among those being sought out for negotiations include Turkmenistan, Slovakia and Hungary. Negotiations with the latter of the three are almost settled, according to a statement by Eduard Stavitsky, the Ukrainian environment and natural resources minister, but "there are some technical difficulties from the Slovak side which we are currently negotiating," he said, adding Slovak and Hungarian gas imports could begin as early as the first quarter of 2013. Imports from liquefied natural gas terminals in Turkey from Romania and Bulgaria are also in the works.  

Ukrainian President Viktor Yanukovych visited Turkmenistan Feb. 12-14 with the intention of discussing a potential natural gas deal, a meeting that was organized by Ukrainian Foreign Affairs Minister Leonid Kozhara during a visit to the central Asian country last month. Ukraine hopes to rekindle a partnership with Turkmenistan which, up until 2006, had supplied more than 30 billion cubic meters of gas to Ukraine every year. However, because imported gas must go through Russia, the terms of the agreement will have to be solidified by Moscow as well, assuming talks with Turkmenistan result in a deal.

The efforts to make the transition follow a $7 billion gas bill from Gazprom in January as a result of a "take or pay" clause in a contractual agreement, which the company claims Ukraine violated in 2012 when it failed to take the required amount of natural gas. Referring to some $10 billion spent on imported gas last year, Stavitsky claimed Ukraine did "not consider it appropriate to pay the $7 billion bill, because we have no reasons for that. We complied with the required terms of the contract," The Financial Times reported.  The current agreement between Ukraine and Gazprom commenced in 2009 but had seen dramatic increases in gas prices due to the rise in oil prices.

Ukraine has made several attempts to renegotiate the current deal with Gazprom, but all negotiations ultimately ended in deadlock over pricing and Ukraine's unwillingness to lose control over its pipelines. Last November, Ukraine secured an agreement with Germany's RWE for gas at a cheaper price than what Gazprom is offering.

On Feb. 8, Gazprom announced plans to extend price cuts to European customers by a total of $4.7 billion in 2013 in an effort to remain in agreement with clientele in a struggling European economy and a growing competition of liquefied natural gas suppliers.

Richie Parrish can be reached at news@praguepost.com