By Henry Foy in Warsaw, Courtney Weaver in Moscow and Neil Buckley in Kiev
September 10, 2014
Financial Times
Russia Tightens Gas Supplies to Poland
General view of the gas station near the border between Ukraine and Poland in the settlement of Drozdovychi, 120 km (75 miles) west of the Ukrainian city of Lviv.
Moscow has reduced its gas exports to Poland in an apparent attempt to prevent EU countries from re-exporting Russian gas as a lifeline to Ukraine.
Russia halted its direct gas shipments to Ukraine in June amid a pricing dispute that has accompanied their broader conflict over Crimea and eastern Ukraine.
The latest move by state-controlled Gazprom to crack down on re-exports represents a further tightening of Moscow’s noose around Kiev before a winter that could cripple its economy if it cannot secure sufficient energy supplies.
Poland’s state gas group PGNiG said on Wednesday that Gazprom had delivered 20 per cent less gas on Monday and 24 per cent less gas on Tuesday than it was contracted to supply. Kiev confirmed Poland had been forced to stop re-exports to Ukraine in response to these cuts.
Gazprom has denied withholding any gas. “At present, Poland is being supplied with 23 mcm/d, the same amount of gas it has been supplied with in previous days,” a representative for the company said.
Russia has been threatening to reduce gas flows to the EU to prevent so-called “reverse flows” of its gas to Ukraine via Poland, Slovakia and Hungary, according to senior EU officials and eastern European diplomats.
The heightened pressure on Ukraine’s energy network came as Petro Poroshenko, Ukrainian president, raised hopes on Wednesday that the military conflict might be coming to an end by saying that Russia had removed the majority of the forces it had deployed in his country.
“According to the latest information I have received from our intelligence, 70 per cent of Russian troops have been moved back across the border,” he said. “This further strengthens our hope that the peace initiatives have good prospects.”
Russia and Ukraine are due to hold talks on resuming gas supplies this month but the negotiations have been overshadowed by fighting in eastern Ukraine and increased EU sanctions against Moscow.
Igor Prokopiv, head of Ukraine’s gas pipeline operator, confirmed the knock-on effect in Ukraine.
“At 2pm Poland stopped reverse gas flows to Ukraine which had been in the range of 4m cubic metres,” he told journalists in Kiev. “Today Poland put in an order for 11 mcm a day, and Russia confirmed orders for 7mcm. Those 4mcm are our reverse flows.”
Mr Prokopiv said Poland had asked for a two-day technical break to find replacement resources from the Polish domestic market, which PGNiG said was not affected by Russia’s move.
With the EU poised to tighten sanctions on Russia in response to the crisis in Ukraine, Courtney Weaver, Moscow Correspondent, tells Fiona Symon how the moves are being viewed in Russia.
In an attempt to broker a longer-lasting peace in eastern Ukraine, Mr Poroshenko added that he would present proposals next week to grant “special status” to areas of the east controlled by separatist rebels.
But the Ukrainian president insisted his proposals for rebel-held areas of the Donbass, or Ukraine’s industrial east, would not amount to independence, as the separatists have demanded, or the full-scale federalization called for by Russia.
He said a peace plan signed at talks in Minsk last Friday “envisages the restoration and preservation of Ukrainian sovereignty on all the territory of the Donbass, including that controlled by the fighters,” he said.
Energy supplies are one of Ukraine’s most serious vulnerabilities. It is one of the world’s least efficient energy consumers and its supply crunch is being compounded by falling coal production in the Donbass region, which has been affected by conflict. Ukraine needs to import about half of its consumption of about 50 bcm annually and analysts reckon it would be hard to weather the winter without imports of 5bcm to 10bcm
The volumes of reverse-flows are modest in comparison with Ukraine’s needs. Slovakia is exporting some 21 mcm/d, Hungary can supply 16 mcm and Poland can send 4 mcm.
Ukraine complained last month that reverse flows were running at far less than potential capacity; Hungary for example is sending only about 3 mcm, because its priority is to fills its own storage facilities in readiness for a stand-off with Russia.
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