You're reading: Naftogaz Ukrainy halts gas exports to Poland

Ukrainian national oil and gas company Naftogaz Ukrainy has halted exports of Ukrainian gas to Poland, Polish state oil and gas company PGNiG said in a statement.

The exports were halted due to a new law in Ukraine that requires Naftogaz to sell all the gas it produces on the domestic market.

"PGNiG does not accept the Ukrainian side’s arguments and will demand that it meet its obligations under the contract expiring in December 2020," the statement said.

The contract calls for delivery of up to 9 million cubic meters a year.

A source at the Fuel and Energy Ministry confirmed to Interfax that the exports, delivered to the town of Hrubieszow in Poland, have been halted. The two state companies are currently negotiating a resolution to the situation.

Polish newspaper Gazeta Wyborcza reported in June 2010 that PGNiG plans to boost gas imports from Ukraine to 200 mcm a year from 5-6 mcm currently. The gas was to be supplied to local distribution networks, not the national network.

PGNiG reported on construction of a gas pipeline from Hrubieszow on the Ukrainian border to Zamosc in its annual report for 2009.

Naftogaz and PGNiG agreed construction of a medium-pressure pipeline from Ustyluh in Ukraine to Hrubieszow in Poland in October 2004. They also concluded an agreement on Naftogaz gas deliveries on the new pipeline.

Ukraine’s forecast gas distribution balance for 2010 includes exports totaling 9 mcm by Ukrgazvydobuvannia. The same amount was contained in the balance for 2009 and 2008. The 2007 balance called for 6 mcm of exports.

Ukraine produces about 20 bcm of gas a year. Naftogaz is required to sell 90% of production to meet the needs of the public.

Poland consumes about 14 bcm of gas a year. It must import about 70% of the total.