Ukraine Wants To Buy European Gas To Boost Energy Security

[April 11, 2014]  By Natalia Zinets

KIEV (Reuters) — Ukraine hopes to buy gas from Europe to shore up its energy security, fearful Russia will cut gas supplies over Kiev's refusal to pay Moscow's "political, uneconomic price" for supplies, its energy minister said on Friday.

Yuri Prodan told parliament the European Union would stand in solidarity with Ukraine if Russia reduced supplies, making sure Moscow could not increase flows through alternative pipelines to bypass its former Soviet neighbour.

Russian President Vladimir Putin warned European leaders on Thursday that gas supplies to Europe could be disrupted by Ukraine's failure to pay its gas bills, a move Washington said was using energy "as a tool of coercion".

"Ukraine cannot pay such a political, uneconomic price, so now we are negotiating with the European Union about reverse deliveries into Ukraine," Prodan said.

"We will make gas purchases from reverse flows urgently. On the conditions offered by European gas companies. We plan that they will be Germany's RWE and a French gas company."

The ministry's spokeswoman confirmed the French company was GDF Suez, adding no agreement had been signed as yet.

Russia has nearly doubled the gas price it charges Ukraine, punishing an economy that for years was mismanaged by pro-Moscow President Viktor Yanukovich and has been in freefall since he was toppled in violent protests.

Kiev's new leaders accuse Moscow of using gas as a way of punishing them for pursuing closer ties with the EU, and the standoff has deepened the worst East-West crisis since the end of the Cold war in 1991.

Ukraine has vowed to look elsewhere for gas, but Russian state gas company Gazprom has questioned the legality of reversing flows so that Europe can export it to Ukraine.

Prodan said Ukraine could get small amounts of gas from Poland and Hungary, and a bigger volume from Slovakia, but there were "political questions" to be solved.

Slovakia has called for talks with Ukraine, Russia and the European Commission, the EU executive, to ensure it can export gas to Ukraine without violating existing contracts.

Russia, Ukraine, the EU and the United States are due to meet in Geneva on Thursday to talk about the Ukraine crisis.

Prodan also said Ukraine would turn to an arbitration tribunal in Stockholm to try to cancel a deal struck with Russia in 2009, when Kiev agreed an inflated price.

(Reporting by Natalia Zinets; writing by Elizabeth Piper; editing by Timothy Heritage)

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