Russian Federation resumes gas supply to Ukraine

Gazprom CEO Alexei Miller said his company had reopened the pipelines to Ukraine after receiving a prepayment of $234 million (205.3 million euros) for the month of October, out of an expected $500 million.

Anxious that conflict-ridden Ukraine is not a reliable transit route, the state-run company signed a shareholders’ agreement with five European firms last month to build the Nord Stream II pipeline under the Baltic Sea to Germany. “Ukraine has requested maximum supplies volumes – 114 mln cubic meters per day, which is in line with Ukraine’s annual gas offtake of 52 bln cubic meters”, he said. Russian Energy Minister Alexander Novak said at the time that anything more in terms of discount expectations from Ukraine was “completely groundless”.

Trilateral talks between the European Union, Russian Federation and Ukraine collapsed in July over pricing disputes.

Construction or preliminary work has begun on three new gas pipelines created to flow new supplies of natural gas from Azerbaijan to consumers in Turkey, Bulgaria, Greece, and Italy.

“Putin is betting on Nord Stream, but that bet is risky”, Sijbren de Jong, energy security analyst at the Hague Centre for Strategic Studies, said by e-mail.

“We need at least 19 billion cubic metres to pump into our storage facilities to ensure gas transit”.

The resumption of deliveries could help Kiev accumulate 17 billion cubic metres of natural gas by October 21, the absolute minimum for the security of gas transit to Europe.

But these reserves could not be enough if the winter is harsh, they warned.

“Russia is realizing the situation, and having to adapt their strategy in Europe”, Dr. James Henderson of the Oxford Institute for Energy Studies told Oil & Gas 360 in an exclusive interview.

Moscow hiked the price it charges Ukraine following last year’s ouster of Kremlin (LSE: 0Q8D.L – news) -backed leader Viktor Yanukovych which unleashed a pro-Russian insurgency in the east of the ex-Soviet country.

The Kremlin opted to keep prices for Ukraine unchanged from the second quarter, which included a $40 discount per 1,000 cubic meters purchased.