UPDATE 3-Ukraine may force changes in Russian gas transit to Europe

Mon Aug 11, 2014 12:03pm EDT

Related Topics

* Ukraine previously promised to guarantee gas transit to EU

* European Commission is analysing the details (Adds European Commission reaction)

By Pavel Polityuk

KIEV, Aug 11 (Reuters) - Ukraine said European companies would have to agree on a major revision of gas contracts with Russia if Kiev imposes sanctions on Moscow and Gazprom , a measure that may lead to disruption in gas transit to Europe.

Ukraine Prime Minister Arseny Yatseniuk said last week that parliament would debate sanctions against Russia on Tuesday, which could include bans on Russian gas and sanctions against Russian banks.

Ukraine gas grid Naftogaz said on Monday that the sanctions could limit or even exclude some companies from piping gas through the country, which would allow other firms to take over transit operations. The statement did not mention Gazprom or Russia.

"The main idea is - transit could continue with no problems if this gas is bought at our eastern border by let's say European companies," a Naftogaz spokeswoman told Reuters.

European companies buy gas from Russia on the western border between the European Union and Ukraine. Russia supplies about 30 percent of EU gas needs, and the transit route for roughly half of that amount is through Ukraine.

Gazprom, the only company that pumps Russian gas to Europe through Ukraine, did not reply to a Reuters request for comment.

The European Commission said it was looking into the details of the proposal.

"Any possible concerns the EU may have on this draft legislation will be made known by the appropriate channels to the Ukraine government," spokeswoman Marlene Holzner said in an emailed statement.

If agreed, the proposed sanctions could lead to a major revision of gas contracts between Gazprom and its European partners. Gazprom had already had disputes with a number of its Western partners over its pricing policies, which have cost it billions of roubles.

Previous pricing and contract disputes between Moscow and Kiev have led to cuts in Russian gas flows to the European Union.

PROMISE OF SMOOTH TRANSIT

Russia halted gas supplies to Ukraine in June because of a row over pricing, but Russian gas transit through Ukraine to Europe has been unaffected so far.

In July, Ukraine imported gas from Poland and Hungary, but the volumes amounted to about a tenth of its imports a year ago.

Naftogaz said it would continue uninterrupted pumping of Russian gas exports to Europe through its territory even if Ukraine imposes its own sanctions on Russia.

"Naftogaz affirms its readiness to continue smooth transit of natural gas to European consumers," Chief Executive Andriy Kobolev said in a statement.

Prices of long-term gas contracts in Germany and central Europe eased on Monday after Kobolev's comments.

Apart from Ukraine, Russian gas to Europe is shipped via Belarus and via the Baltic Sea pipeline Nord Stream. Norway's Statoil already acknowledged it could boost supplies in Europe but cannot fully substitute for Russian gas. (Writing and additional reporting by Katya Golubkova in Moscow and Barbara Lewis in Brussels; editing by Dmitri Zhdannikov and Jane Baird)

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