“We have reduced gas purchases from Russia to 27 billion cubic meters this year from 41 bcm in 2011,” Yanukovych said. “We also plan to curtail our purchases in the next few years. The only reason is that we don’t have enough money to pay for it and the price of gas is unbearable.”
Russia and Ukraine have become embroiled in a drawn-out dispute over the price and volume of Russian gas purchased by Ukraine, with Kyiv insisting the current price is too high and Moscow pushing for control of Ukraine’s system of gas transit to Europe as part of any deal to cut prices.
Ukraine, it seems, aims to purchase 106 million cubic meters from Germany in an effort to reduce its dependence on Russian natural gas. Naftogaz Ukraine is reported to be planning to sign a short-term contract with Germany’s Rheinisch-Westfälisches Elektrizitatswerk energy company to deliver spot gas bought from Europe to Ukraine via Slovakian pipelines.
The reasons behind these decisions are the same: Ukraine is not satisfied with the high price of Russia’s natural gas, which is supplied under contract which was signed in 2009 by the government of then Prime Minister Yulia Tymoshenko. It is hardly surprising that Ukrainian energy companies are not happy about that contract —Tymoshenko has been sentenced to 7 years in prison for signing it.
Time and again, Ukrainian officials have repeated that the price of Russian gas, as established by the contract signed in 2009, is destroying Ukraine’s economy. Even Russian’s latest offer of a 10 percent discount, made after Russia’s similar discount to other European customers, is not enough to allow Ukraine to keep the lights on.
Zoya Burbeza is a solicitor at Zaiwalla & Co. Solicitors, a niche London firm specializing in international commercial arbitration and litigation.
