Ukraine-Russia Gas Deal: EU Pushes for Extension of the “Winter Package”

Written by | Tuesday, March 31st, 2015

Naftogaz, Ukraine’s state-run energy giant, announced yesterday (30 March) that the European Commission had suggested extending the current gas supply agreement with the Russian producer Gazprom until April next year. “Naftogaz welcomes the proposal by the European Commission to extend the so-called ‘winter package’ until the end of the next autumn-winter period,” Naftogaz said and added that “it has sent a letter to Gazprom in which it suggested the possibility of an extension of the ‘winter package’.”

European Commission Vice-President in charge of the Energy Union, Maros Sefcovic, reportedly informed both companies that the EU executive is ready to hold a trilateral meeting to discuss the proposal on prolonging the agreement in Brussels in mid-April. Citing pending unpaid bills, Russia had stopped its gas supplies to Ukraine last June but Kiev complained that Moscow had set unfairly high prices because of Ukraine’s pro-Western direction. In October last year, Brussels brokered another gas deal based on which Kiev was supposed to pay $3.1 billion in order to maintain the Russian supplies. In the meantime, Kiev has been looking for alternative energy sources to mitigate the consequences of a potential disruption in the supplies from Russia. Ukraine also signed a pipeline deal with Poland in January this year to rely on regional gas terminals may the need arise.

This month, Ukraine and Russia held another round of talks after Moscow accused Kiev of not paying the pending bills. Notwithstanding these tensions, both countries agreed that gas supplies would continue. Ukraine is not the only one interested in maintaining the continuity of Russian supplies. The EU depends on Russia for about a half of its gas and Ukraine is an important transition point. Kiev moreover announced last year that it could temporarily interrupt its gas imports from Russia as of April when the current deal expires. The country currently pays $329 per 1,000 cubic meters of gas although Russia said the price would go up to $348 in April. Ukraine says that a reasonable price would be between $240 and $250.

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