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Ukraine Pays 20% More For EU Gas Than It Would Have Paid To Russia

France’s energy group Engie started direct gas deliveries to Ukraine at the beginning of January, and Kiev is paying 20 percent more for the EU gas than it would have paid to Gazprom if it had agreed to Russian deliveries before the cold winter temperatures settled in.

According to a press release from Ukraine’s gas transit company UkrTransGaz, Engie started delivering gas as per the contract that the parties had signed in October last year.

According to Russian media, the price of gas from EU countries was $230 per 1,000 cubic meters, which is 20 percent more than what Russian gas would have cost Ukraine, if it had agreed to imports: $186 per 1,000 cubic meters.

Ukraine stopped purchases of Russian gas in 2015 over a gas pricing dispute, with relations between the two countries already soured with Russia’s annexation of Crimea.

Last month the European Commission resumed efforts to broker a deal and held a trilateral meeting with Russia and Ukraine ahead of the winter in Europe, where a number of EU countries rely on Russian gas transiting Ukraine. Russia’s Gazprom and Ukraine’s Naftogaz are suing each other over the gas pricing contracts in an international arbitration court in Stockholm, with each claiming around US$30 billion. Ukraine insists that some clauses in the long-term contract are against Ukrainian and EU antitrust laws.

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After the meeting at the EC, Aliona Osmolovska, a spokeswoman for Naftogaz, told Bloomberg that Ukraine can’t buy gas from Russia without a supplementary agreement on payment terms, and that Russia won’t sign the supplementary accord.

Just a few days ago, Naftogaz said that it expected foul play from Gazprom regarding the transit of Russian gas via Ukraine to Europe. According to Naftogaz, Gazprom is likely to find itself short of sufficient amounts of gas to satisfy the needs of both its domestic and foreign clients, and therefore accuse Ukraine of using Gazprom gas for its own needs, and then making the Ukraine pay for it.

By Tsvetana Paraskova for Oilprice.com

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