Germany’s RWE Starts Pumping Natural Gas To Ukraine
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A German utility company has begun supplying natural gas to Ukraine under a contract signed two years ago, reported the Wall Street Journal, bringing hopes that Ukraine can reduce its reliance on gas imported from Russia.
RWE is the first European energy company to agree to supply gas to Ukraine, with the delivery likely to come via pipelines in Poland.
A German utility company has begun supplying natural gas to Ukraine under a contract signed two years ago, reported the Wall Street Journal, bringing hopes that Ukraine can reduce its reliance on gas imported from Russia.
RWE is the first European energy company to agree to supply gas to Ukraine, with the delivery likely to come via pipelines in Poland.
Nevertheless, nearly a third of the energy supply still comes from gas bought by RWE from Russia, with the rest coming from Norway, Britain, the Netherlands and Germany.
Under an agreement signed with Ukraine’s state-owned Naftogaz in 2012, RWE could supply up to 10 billion cubic metres (bcm) of natural gas per year, the company said.
The current delivery, which began on Tuesday, is only a tiny fraction of that amount – largely symbolic for the moment – but could potentially be ramped up to provide about a fifth of Ukraine’s gas needs, once other reserve pipelines are cleared for delivery.
According to Reuters, the Polish pipeline could potentially deliver up to 1.5 bcm annually. Pipelines from Hungary (3.5 bcm), Romania (1.8 bcm) are still awaiting clearance.
“Further significant volumes could be delivered to Ukraine if various transport restrictions at the Slovakian-Ukrainian border are politically and technically resolved within the next weeks or months,” the company said. Talks between senior officials from Slovakia and Ukraine failed to reach an agreement Tuesday, after the two sides couldn’t settle on which pipeline to use for the reverse-flow supply.
RWE’s spokesman Helmut Weintoegl said that the price its company was charging was “more attractive” than what Russia was charging Ukraine.
[quote]”The price is a normal market price,” Weintoegl told The Associated Press. “It’s currently more attractive for Ukraine than what it pays in its long-term contracts.”[/quote]Ukraine consumed around 50 bcm of gas in 2013, of which 60 percent came from Russia, according to its government. Following the dispute last month, Russia has nearly doubled the gas price it charges Ukraine.
Related: Russia Raises Ukraine’s Gas Price For Second Time In A Week
Related: Ukrainians To Pay 50 Percent More For Gas Under IMF Bailout Package
Related: Why Ukraine’s Gas Industry May Be The Most Profitable In The World
The state-owned Russian gas company Gazprom has already warned that it may look through its current deals with Germany to determine if re-exporting gas to Ukraine is in breach of contract.
The utility firm however defended its position claiming that current gas deliveries come from the company’s overall portfolio – a mix of various countries.
