Ukraine prepares gas facilities for possible transit supply cut

KIEV, Aug 14 (Reuters) - Ukraine’s gas transport company Ukrtransgaz has upgraded several gas pumping stations so it can provide gas to eastern and southern regions of the country if there is a disruption in supply from Russia, the company said on Wednesday.

More than a third of Russia’s gas exports to the European Union cross Ukraine, providing Kiev with valuable transit income.

Ukraine traditionally uses some of the gas pumped by Russia to European consumers for its own needs in eastern and central regions and then compensates for this by deliveries from gas storage located in the west of the country.

But the Russia-Ukraine gas transit agreement is due to expire in January and Ukrainian energy authorities are worried that Moscow could stop gas supplies through Ukraine, leaving some Ukrainian regions without gas in winter.

“As of today, Ukrtransgaz has implemented all the necessary technical and regulatory solutions to create a reliable reverse scheme and it is ready for regular operation and can be activated immediately if necessary,” Uktransgaz said in a statement.

It said Ukraine had already reversed gas flows in 2009 when Russian gas giant Gazprom halted gas supplies to Ukrainian consumers because of a price dispute.

Last month, Russian energy minister and several sources said Russia wanted to strike a short-term deal with Kiev on gas transit to Europe when the current 10-year agreement expires to buy time to complete pipelines that will bypass Ukraine.

But Kiev and its European allies want guarantees that Ukraine will remain a transit route for Russian gas to Europe.

In January, European Commission Vice President Maros Sefcovic floated a proposal for the two countries to agree a new 10-year transit contract, with a guaranteed minimum yearly transit volume of 60 bcm and 30 bcm of additional flexibility.

Ukraine’s energy firm Naftogaz said last month Kiev was still counting on Sefcovic’s proposal.

The potential for problems with the transit agreement, which brings Kiev around $3 billion revenue per year, prompted Ukraine to increase its winter gas reserves by 18% compared with last year to 20 billion cubic meters (bcm).

Naftogaz said this week Ukraine had stored 16.6 bcm of gas by Aug. 10, up from 13.38 bcm at the same time last year.

Ukraine consumed 32.3 bcm of gas in 2018, 10.6 bcm of which was imported from European markets outside Russia.

Relations between Kiev and Moscow plummeted after Russia’s annexation of Ukraine’s Crimea peninsula in 2014.

Ukraine halted its own purchases of Russian gas in 2015. (Reporting by Pavel Polityuk. Editing by Jane Merriman)