October 13, 2015 / 3:38 PM / 4 years ago

EU sees Ukraine winter gas funded, wants more in storage

BRUSSELS (Reuters) - European Union officials who brokered the Russian gas supply deal to see Ukraine through the winter are confident it is funded and would like Kiev to top up its stocks by up to 20 percent before the cold sets in.

Vice-President of the European Commission in charge of Energy Union Maros Sefcovic holds a news conference on the EU-Russia-Ukraine trilateral gas talks in Vienna, at the EC headquarters in Brussels, Belgium, July 1, 2015. REUTERS/Eric Vidal

Maros Sefcovic, the European Commission vice president for energy, told Reuters that a deal agreed in Brussels on Sept. 26 set a formula that would give Ukraine Russian gas at a price similar to others in the region, and notably Poland.

The first supplies reached Ukraine on Monday after a three-month break as Kiev and Moscow, locked in conflict over Russia’s annexation of Crimea and support for rebels in eastern Ukraine, haggled over prices being charged by Russia’s Gazprom.

Asked whether the EU was ready to stand by with further funding for Kiev to buy gas, Sefcovic stressed that Brussels was mobilizing support from international financial institutions.

Noting a $300 million loan for gas approved by the European Bank for Reconstruction and Development (EBRD), he said an agreement between the World Bank and the European Investment Bank (EIB) should provide some $500 million more “by the end of this year or the beginning of the new year”.

The EIB agreed last week to guarantee up to $520 million of World Bank loans to Ukraine for gas.

Ukraine would also be able to use its own budget resources, including from gas transit fees and gas sales to consumers.

“Winter purchases should be guaranteed,” Sefcovic said in an interview. “But of course it will depend on many other details and therefore we said that we will continue to be very closely working with both sides so we can react to any eventuality.”

The Commission hopes Ukraine will build up its stocks in storage tanks in the coming weeks from their level on Monday of 15.8 billion cubic meters (bcm): “We would have liked to have ... much closer to 19 bcm,” Sefcovic said.

“We still need to use the remaining weeks before winter gets really, really cold,” he said. “We have a solid plan of how to fill up the storage and mobilize the financial resources.”

The Ukrainian authorities say they will add to stocks.

Sefcovic declined to put a figure on the price Gazprom is charging Ukrainian utility Naftogaz under the new winter package but said it was in line with that being paid by Poland — a price which is also undisclosed.

“The price will be determined in a way that reflects the price in the region,” he said. “More or less the price that Poland is paying for the gas.”

Russia’s energy minister said 10 days ago the discounted price paid by Kiev in the fourth quarter would be roughly $227-$233 per thousand cubic meters. His Ukrainian counterpart had earlier indicated the price would be below $228.

Additional reporting by Barbara Lewis, Pavel Polityuk in Kiev, Agnieszka Barteczko in Warsaw and Katya Golubkova in Moscow; editing by Susan Thomas

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