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Ukraine begins importing gas via Hungary
Journal Staff Report

KIEV, March 28 - Ukraine on Thursday began importing natural gas via a gas pipeline in Hungary, making it the second route for the countrys imports of European gas, Prime Minister Mykola Azarov said.

The move underscores Ukraines persistent efforts to reduce imports of Russian gas and to increase imports of gas from elsewhere in order to secure greater energy independence.

"I am pleased to inform you that the first molecule of Hungarian gas has today crossed the Ukrainian-Hungarian border, Azarov said at a press conference in Budapest. "This is a very big event. It really means a breakthrough to end the energy dependence.

Ukraine since November 2012 has been importing a small amount of European gas via a pipeline in Poland, but the Hungarian route offers a greater capacity.

The Hungarian pipelines have capacity to move up to 5 billion cu m/year of gas to Ukraine, while the Polish pipelines after a 6-month upgrade will be able to move up to 2 billion cu m/year, according to Energy and Coal Industry Minister Eduard Stavytskiy.

The two routes combined will be able to move up to 7 billion cubic meters of natural gas from Europe in 2013, Stavytskiy said.

All European gas supplies are carried out according to an agreement signed between Naftogaz and Germany's RWE in May 2012. The agreement calls for supplies of 5 billion cu m of gas in 2013 with the possibility of eventually expanding volumes to 10 billion cu m/year.

Ukraine will increase the imports if European gas prices continue to be lower than those in Russia, Stavytskiy said.

If the economic efficiency allows us to buy [European] gas, we will continue to do it, Stavytskiy said.

Ukraine was purchasing gas at $380/1,000 cu m in Europe in the first quarter, compared with $406/1,000 cu m in Russia in the first quarter of 2013, he said.

The Russian price includes a $100/1,000 cu m discount that Moscow offered in April 2010 in exchange for the Russian Black Sea Fleet navy continuing to station its ships in Ukraines Sevastopol through 2047.

Without the discount, Ukraine would have to pay $506/1,000 cu m of the Russian gas the first quarter, according to a 10-year agreement singed in January 2009.

Ukraine planned to cut Russian gas imports to 18 billion cu m in 2013, down from 24.9 billion cu m in 2012 and 40 billion cu m in 2011, according to the energy and coal industry ministry.

Stavytskiy said Ukraine has dramatically already reduce imports of gas from Russia in March and said the countries still have disagreement on gas prices.

I would like to stress that we have practically not been purchasing gas from the Russia territory in March, Stavytskiy said. Thats because we have failed to resolve the issue of prices. (tl/ez)

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