Ukraine's gas buys from Europe "fraudulent", Gazprom says

Sun Mar 31, 2013 9:10am EDT

Related Topics

* Ukraine seeks more exposure to spot market in Europe

* Ukraine makes "fraudulent" reverse supplies -Miller

By Alexei Anishchuk

MOSCOW, March 31 (Reuters) - Ukraine is using a "fraudulent scheme" to carry out reverse shipments of Russian gas from the European market, Gazprom CEO Alexei Miller said late on Saturday, further raising tensions in a price dispute with Kiev.

Ukraine, a transit route for more than half of Russian gas shipped to the European Union, wants to pay less for gas from Russia because it says a 2009 deal with Moscow set an exorbitant price, and aims to buy more gas from Europe.

The two ex-Soviet neighbours have a record of pricing disputes which have resulted in interruptions of Russian gas supplies to Europe.

"There are no de facto and physical reverse supplies planned, but what is planned is to use Gazprom's gas through some virtual reverse," the monopoly's head told Rossiya-24 state-run TV. "This is reminiscent of some fraudulent schemes and one needs to deal with it."

Spokespersons for Ukraine's deputy prime minister on energy issues Yuri Boiko and Fuel Minister Eduard Stavitsky were not available for comment on Sunday.

Miller said the scheme was enforced using technical manipulations at gas-measuring stations.

Reiterating Gazprom's position, he said buying gas from Europe at spot prices will not be economically viable for Ukraine, which currently buys Russian gas at a fixed price of $430 per 1,000 cubic metres.

"There is no required gas volumes available there (in Europe) in principle, at least not the volumes which Ukraine needs," Miller said. "Secondly, gas prices at all European spot platforms are higher than those on Gazprom's long-term contracts."

Spot prices have been on the rise in Europe due to unseasonably cold weather in the past few weeks. The March average UK spot gas price is around 85.6 pence a therm, some 10 pence below the Russian price.

Ukraine began importing a small volume of gas from Europe last year and wants to import up to 8 billion cubic metres of gas a year from central Europe to replace expensive Russian supplies.

Moscow has demanded concessions as a condition for reviewing the price agreement, such as Ukraine joining a Russia-led trade bloc or giving up control of its pipeline network.

Moscow has already made it clear it was unhappy with Ukraine reducing imports from Russia and sent Kiev a $7 billion bill in January for what it says are volumes of gas Ukraine was obliged to buy under the "take or pay" contract. (Additional reporting by Pavel Polityuk in Kiev; Editing by Catherine Evans)

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