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Ukraine declared an 'anti-terrorist operation' Tuesday against pro-Russian militia in eastern Ukraine's Donetsk region. Meanwhile in the West, Kiev courted its European neighbors for alternative fuel supplies that would boost its energy security.

As tensions in eastern Ukraine's Donetsk region escalate, Kiev is quietly cobbling together Western energy supplies to lessen its reliance on Russia.

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As of Tuesday, Ukraine has European natural gas flowing from Germany, an extended nuclear fuel contract with an American company, and the potential for expanded gas flows from Slovakia. None of it is enough to offset Russia's stronghold on Ukraine's energy industry, and there are plenty of obstacles to Western neighbors coming to Ukraine's aid. Still, the contracts and negotiations suggest Ukraine isn't wasting any time in finding alternative, Western supplies.

German energy company RWE began delivering natural gas to Ukraine via Poland Tuesday, the company announced in a statement, making it the first European company to supply gas to Ukraine this year. The supplies come undera five-year framework agreement between an RWE subsidiary and Naftogaz, Ukraine's state-owned gas company, which could deliver up to 10 billion cubic meters (bcm) of the heating and electricity fuel per year.

In 2013, Ukraine consumed between 53 and 55 bcm of gas, about half of which it buys from Russia, according toMoody's Investors Service. Ukraine has missed several payments since last fall, amassing a debt of about $2.2 billionto Russia's state-owned gas company Gazprom. Previously this month, the company effectively doubled the price it charges Ukraine for natural gas, and warned of a possible shutoff if Naftogaz continues to miss payments.

RWE will charge prices based onEuropean wholesale levels including delivery costs, the company said in a statement, meaning it would likely undercut the $485 Gaprom now charges Ukraine per bcm of natural gas. That price is the highest Gazprom charges any customer and well above the European average of $370 per bcm, according to Reuters.

Ukrainian officials were also in Slovakia Tuesday, hoping to secure as much as 14 bcm annually in reverse gas flows from another neighbor to the west, but a deal failed to materialize.

"No agreement on the issue has been reached yet due to unresolved issues regarding contracts between [the Slovak gas transmission company] Eustream and third parties," Slovak Economy Ministry spokesman Stanislav Jurikovic said, as reported by The Wall Street Journal.

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Ukraine makes inroads on energy security as Donetsk teeters (+video)

Ukraine began an offensive against separatists in its eastern regions, recapturing an airport amid claims Russian special forces were supporting the anti-government groups.

Units from Ukraines Interior Ministry yesterday ousted pro-Russian activists whod seized the airfield in Kramatorsk, though there were conflicting accounts on casualties. While there were no reports of violence overnight, two Ukrainian soldiers were kidnapped, according to the Interfax news service. U.S. Representative Mike Rogers, chairman of the House Intelligence committee, accused Russia of sabotage.

There are Russian citizens who are, again, military and intelligence operatives in eastern Ukraine fomenting this trouble, Rogers said yesterday in an interview on CNN. They are recruiting, and theres some level of training.

The airport operation marked Ukraines first foray against armed activists holding government buildings in cities near the Russian border. Efforts to contain the insurgency risk escalating tensions with Russia, which warned of a potential civil war. NATO says Russia has 40,000 troops massed on Ukraines border after its annexation of Crimea last month.

With tensions running high, the U.S. and its European allies are threatening a new round of penalties against Russian interests if the crisis continues. Envoys from Ukraine, Russia, the U.S. and European Union are scheduled to hold talks tomorrow in Geneva on the situation.

Sanctions imposed by the U.S. and EU have already had an impact. Russias Micex Index of equities has lost 12.7 percent this year, while the ruble has weakened 8.9 percent against the dollar. After declines yesterday, the benchmark stock index gained 0.2 percent today. The ruble appreciated 0.3 percent.

The unrest has also hurt Ukrainian asset prices. The hryvnia, this years worlds worst performer against the dollar among more than 100 currencies tracked by Bloomberg with a 30 percent loss.

The clashes have prompted diverging views from Russia and the U.S. Speaking with United Nations Secretary-General Ban Ki-moon, President Vladimir Putin called the events unconstitutional and demanded international condemnation of the crackdown, according to a statement e-mailed by the Russian leaders press service.

The U.S. is admiring the restraint show by Ukraine, with Russia directly and indirectly supporting the provocations, White House press secretary Jay Carney said.

Polands Foreign Minister Radoslaw Sikorski said in an interview with Polish broadcaster TVN24 that Putin has a credibility problem in denying Russian troops are in Ukraine after similar denials in Crimea proved to be false.

Link:
Ukraine Starts Offensive, Says Russians Among Separatists

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