Russia assures Europe on stable gas supplies

ROME (Reuters) - Russia’s energy minister on Monday assured Europe that it would receive stable gas supplies from his nation despite problems with transit country Ukraine and falling output in Russia.

Russia, which supplies a quarter of Europe’s gas, much of it via Ukraine, has twice cut supplies in recent years due to pricing disputes between Moscow and Kiev.

“There are all the necessary reasons to see stable supplies to Europe,” Sergei Shmatko told a news conference. “The problems of January 2009 will not be repeated.”

Shmatko’s comments came after Russia on Friday rejected a Ukrainian proposal to defer payment on up to $5 billion in gas storage payments.

“Five billion dollars is too much... We are ready to support Ukraine but we just don’t want to do it alone,” he said, calling on the European Union to work closely with Moscow and Kiev to guarantee stable gas supplies.

Turning to the South Stream project to export up to 63 billion cubic metres (bcm) of Russian gas to Europe via a new pipeline, Shmatko said Russia expected to sign agreements within a few weeks with Slovenia and Austria whose support is necessary to launch the project.

South Stream led by Russia's gas giant Gazprom GAZP.MM and Italy's energy major Eni ENI.MI is widely seen as a rival to the EU-backed Nabucco project to bring Caspian oil to Europe.

Gas output in Russia, the world’s biggest producer, is expected to fall by up to 20 percent this year mostly in response to weak demand at home and in Europe, but the decline could be smaller as clients would need to fill up storage facilities later this year, Shmatko said.

“So far we are expecting a fall of 18-20 pct compared to 2008,” Shmatko said. “But I think this fall could be reduced thanks to an increase of pumping gas in the storages.”

Gazprom expects to post an up to 18 percent drop in gas output this year to 450-510 bcm.