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