Limited EU gas flows to Ukraine

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UkrainePMArseny Yatseniuk

London - Ukrainian prime minister Arseny Yatseniuk is hoping Europe can reverse gas down its East-to-West pipelines to help counter “political” price hikes in the gas Ukraine gets from Russia, but it could take until next winter to make the adjustments needed for significant volumes.

Moscow raised its discounted gas tariff for Kiev twice this week, almost doubling it in three days, and Yatseniuk now fears Russia could also restrict gas supplies.

Relations between Ukraine and Russia have turned hostile since popular protests in Kiev ousted pro-Russian president Viktor Yanukovich in February, after which Russia seized Ukraine's Crimea region and formally annexed it last month.

European pipelines are built to pump gas east to west, but building a compressor station on the western side can drive a limited amount of gas eastward.

The European Union has encouraged member states to build such stations following previous gas crises involving disruption of Russian gas supplies to Ukraine, a major transit route for Russian gas.

Flows of about 5 billion cubic metres (bcm) per year can already be pumped to Ukraine through Hungary and Poland, but that represents just 8 percent of Ukrainian demand.

The biggest potential link is via Slovakia, with capacity of up to 20 bcm a year, enough to meet around 35 percent of Ukrainian demand.

Slovakia has already built a compressor station, but it still needs to make a series of technical adjustments to its pipeline network to reverse flows.

The measures still needed include building a new metering station and an interconnector to link the station with existing pipelines to Ukraine.

They could cost Slovakia about 20 million euros ($27 million) and take roughly nine months to complete, an industry source said.

“Slovakia already has enough power to pump gas into Ukraine, but these technical adjustments are necessary,” the source said.

Ukraine and Slovakia began talks on importing gas from the EU last month, when officials from their respective national pipeline operators Ukrtransgas and Eustream met in Brussels.

European Energy Commissioner Guenther Oettinger said he hoped a deal could be reached by the end of April, and Yatseniuk said on Friday that Ukraine was in emergency talks to import natural gas from the West.

Slovak pipeline operator Eustream said talks with Ukrtransgas were ongoing and that discussions in the next few days would be key to nail down a deal.

“Meetings scheduled for the next few days should provide answers to questions of a technical, financial and time nature,” Eustream said in a statement. - Reuters

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