European officials are trying to schedule talks between the sides for later this month.
Barring an end to the dispute with Gazprom, the winter is likely to be bitter. Last year Ukraine consumed about 49 billion cubic meters of gas, or 1.73 trillion cubic feet, a little more than half of which came from Gazprom.
How much gas Ukraine will use this year remains to be seen. Last year, about two billion cubic meters were consumed by Crimea, which has since been annexed by Russia, so that can be subtracted from Ukraine’s demand. The rebel-occupied Donetsk and Luhansk regions account for roughly eight billion cubic meters.
Over all, the Ukrainians believe they can get about 15 billion cubic meters from Europe annually — though about 10 billion of that would come from the Slovak pipeline, and the rest from Hungary and Poland. [eap_ad_2] “Is that enough? Probably not,” said Laurent Ruseckas, senior adviser for global gas with IHS Energy, a research and consulting firm. “By the beginning of 2015, you could start running into trouble.”
The Ukrainians had hoped to have the gas come from larger pipelines, but instead the Vojany-Uzhgorod pipeline, which was not being used, was retrofitted to send gas east. When the pipeline was opened last week, Klaus-Dieter Borchardt, the European Commission’s director of internal energy markets, acknowledged, “It is not a highway we are opening today, but it is more than a bike lane.”
Since gas is still flowing through Ukraine bound for Europe, Russia has already warned about the potential for siphoning. Russia, of course, can simply send less gas to Europe.
In a troubling portent on Wednesday, Poland halted its supply of reverse gas to Ukraine, citing a reduction in supply from Gazprom. P.G.N.I.G., the state-owned Polish oil and gas company, said in a statement that its supplies from the east had been reduced by 45 percent. Gazprom, however, denied there had been a reduction.
Robert Fico, the Slovak prime minister, has opposed sanctions on Russia, putting him at odds with many other European leaders. But Mr. Fico suggested the Slovaks struck a deal that the Russians can live with. Mr. Fico, in remarks at the news conference, called the Vojany-Uzhgorod pipeline “the only possible solution.”
Even with the new Slovak capacity, Mr. Kobolev says he believes Ukraine will have to cut its gas use by about a fifth, no small amount. That will require a 30 percent cut from industry, which he said would come from reduction of business activity in the east, switching fuels and energy savings programs. Households will have to cut their use by about 10 percent. It is another blow for a country whose gross domestic product fell 4.7 percent in the second quarter from the same period in 2013.
Part of Ukraine’s problem has been that people and businesses have been paying artificially low prices, a vestige of Soviet-era policies.
Mr. Kobolev wants to change that, and so does the International Monetary Fund, which pressured Ukrainian officials into raising gas prices as part of the aid package the country received this year. Those increases, however, do not fully phase in until 2018. The market price for gas now is still six times as high as what consumers pay, Naftogaz said.
Mr. Kobolev wants to make his country less dependent on Russia in the future.
“As long as there’s no competition, there’s guys who will squeeze all the juice from you. When there’s competition, they are very likely to come with fair market proposals,” he said. “Until there’s competition, you will never make them do that, and that’s true for Gazprom.”
That sounds good in theory, but it’s not clear how Ukraine will replace Russian gas, and Mr. Kobolev did not show his cards. Ukraine could perhaps switch some of its energy use from gas to coal, encourage more investment to increase domestic production or look to liquid natural gas. But all of that takes time.
“I have many friends who are currently out east, they are currently in military operations,” he said. “I tell myself that I’m not having the most difficult job in the world, and you should stop whining and get yourself to work.” (NY Times)[eap_ad_3]
