Gazprom awaiting new Ukraine government before starting gas transit talks

Gazprom awaiting new Ukraine government before starting gas transit talks
FILE PHOTO: Gazprom logos are on display at Bovanenkovo gas field on the Arctic Yamal peninsula, Russia May 21, 2019. REUTERS/Maxim Shemetov -
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MAXIM SHEMETOV(Reuters)
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By Vladimir Soldatkin and Maria Grabar

MOSCOW (Reuters) – Russian state gas giant Gazprom is awaiting the formation of a new Ukrainian government before starting talks with Kiev about the transit of Russian gas across Ukraine to Europe, a senior company official said on Tuesday.

More than a third of Russia’s gas exports to the European Union cross Ukraine, providing Kiev with valuable income. The current deal between Moscow on gas supplies and transit expires after Dec. 31 this year.

Europe, where Gazprom’s gas market share is over 36%, is closely following the gas talks between Moscow and Kiev.

“We understand that there is quite a difficult political situation in Ukraine today. We understand that a new government should be appointed, changes in the parliament should take place,” Svetlana Burmistrova, the head of Gazprom’s exporting arm, Gazprom Export, told reporters.

“And probably, after that, we will return to the discussions. Because as of today, it’s not a secret to anyone, we don’t understand with whom to hold talks. Who are those people and organisations with whom to talk.”

Ukraine’s new president, Volodymyr Zelenskiy, announced July 21 as the date for a snap parliamentary election.

Talks about continuing the gas agreement or creating a new deal have reached an impasse over numerous issues.

One bone of contention is a lengthy legal dispute between Gazprom and Ukraine state energy firm Naftogaz that led to a Stockholm arbitration court ruling in February 2018 that each company must compensate the other.

Also, Russia wants to bypass Ukraine by installing gas pipelines via the Baltic and Black seas as relations between the two ex-Soviet countries soured following Moscow’s annexation of Crimea.

Russian President Vladimir Putin has said Moscow is ready to keep sending gas to Europe through Ukraine once the current deal with Kiev expires if supplies are economically viable.

Burmistrova also reiterated on Tuesday that the company is keeping its forecast of record-high gas exports to Europe for 2019 in the range of 194-204 billion cubic metres, despite a downward trend this year. Exports reached 201.9 bcm last year.

The company said on Monday that it exported 87.8 billion cubic metres of natural gas to countries outside the former Soviet Union from Jan. 1 to June 15, 6.3% less than in the same period last year.

Burmistrova attributed the decline to warmer weather in Europe and an economic downturn in Turkey, a top consumer of Russian gas.

She also said U.S. liquefied natural gas was not currently replacing Russian gas on European markets.

(Reporting by Vladimir Soldatkin and Maria Grabar; writing by Tom Balmforth and Vladimir Soldatkin; Editing by David Goodman and Dale Hudson)

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