BRATISLAVA (Reuters) - Slovakia and Ukraine signed a deal on Monday that allows the European Union to send a limited amount of gas to Ukraine, but provides Kiev with less than it hoped for to cushion the blow should Russia turn off supplies.
Ukraine has sought to secure alternative supplies to those from Russia’s Gazprom since Moscow annexed Crimea last month and Gazprom raised prices for its gas to levels Ukraine is refusing to pay.
Russia’s seizure of Ukraine’s Crimea region has set off the most serious East-West rift since the end of the Cold War, resulting in EU and U.S. sanctions and raising the threat of interruption of gas supplies from Russia to Europe.
Any so-called reverse flow supplies Ukraine does contract, however, will likely be from Russia delivered through Slovakia or the Nord Stream pipeline running through Germany.
While the amount of potential deliveries via Slovakia is less than a third of Ukraine’s yearly demand, European Commission President Jose Manuel Barroso called the deal an important first step in boosting Europe’s energy security.
“This contributes to greater energy security in eastern Europe and the European Union as a whole,” Barroso told reporters after the pipeline operators of Ukraine and Slovakia signed the deal.
“It shows the European Union’s strong commitment in support of Ukraine’s energy sector.”
Under the deal, Slovakia will make technical adjustments to an old unused pipeline to ship around 8-9 billion cubic meters (bcm) of gas per year starting in the autumn.
It is also possible there could be smaller volumes initially before ramping up to around 9 bcm by April.
Combined, Ukraine could eventually receive up to around 16-17 bcm per year from EU neighbors Poland, Hungary and Slovakia, Slovak Prime Minister Robert Fico said. This represents a little less than a third of Ukraine’s annual consumption of about 55 bcm.
“It is a first step for gas flows from Slovakia to Ukraine and strengthens the ties between the EU’s energy market and Ukraine,” European Energy Commissioner Guenther Oettinger said in a statement. “Deliveries from EU Member States offer Ukraine access to gas priced on the basis of fair and transparent principles.”
Europe takes about a third of its gas imports from Russia, and about 40 percent of that amount flows through Ukraine and into western Europe via Slovakia.
Ukraine has been pushing to receive volumes of up to 30 bcm by reversing flows on pipelines importing Russian gas into Slovakia. Slovakia has refused this approach because it fears this might violate its contracts with Gazprom and risk sanctions or a supply halt.
Gazprom’s consent for such reverse flow is needed, the Commission and the Slovak government say.
Ukraine’s Energy Minister Yuri Prodan said his country would soon start gas import talks with Hungary and seek EU support to negotiate more supply from Slovakia.
He noted Ukraine already receives deliveries from Germany’s RWE through Poland and assured suppliers from the west they would not need to worry about payment - an issue that led Russia to halt supplies in 2009.
A framework agreement signed by Ukraine’s Naftogaz and RWE subsidiary RWE Supply & Trading in 2012 allows for delivery of up to 10 bcm of gas per year and RWE has said supplies from Russia, Norway and the EU would each account for about a third of the gas.
“Today we have supplies from Poland, delivered by RWE, and we have no problem with payments,” Prodan said. “In the near term we will have reverse flows from Hungary as well. I want to assure you that there will be no problems with payments there either.”
RWE, which has started pumping modest amounts to Ukraine from Poland, has said it could ramp up the shipments once there is an agreement on the Slovak flows.
Moscow, which does not recognize the Ukrainian government that replaced ousted President Viktor Yanukovich in February, nearly doubled the gas price for Ukraine to $485 per 1,000 cubic meters from April. Kiev, which is in deep financial trouble, has refused to pay.
Gazprom has said Ukraine owes it more than $2 billion for gas already delivered.
Additional reporting by Barbara Lewis in Brussels, writing by Michael Kahn, editing by William Hardy and Jason Neely