Russian producer Gazprom halted supplies of natural gas to Ukraine as of 10am Moscow time on 16 June after the supplier switched Ukrainian incumbent Naftogaz to a pre-payment system for gas.
European transit via Ukraine has not been affected. Established energy market intelligence provider, ICIS, has held a webinar on the role of Ukraine in Russian natural gas supply to Europe. The webinar focuses on fundamentals of the Russia-Ukraine relationship in the gas sphere, and the effects on the European natural gas sector, providing information crucial for understanding the current crisis.
The supply halt comes after weeks of negotiations between the EU, Ukraine and Russia failed to result in an agreed price that Ukraine would pay for Russian gas. The transit country owes a debt of $4.5bn (€3.3bn) to Gazprom for gas supply but refuses to pay claiming that Russia is over-charging it for gas.
Ukraine transits more than 50% of total Russian gas supplies to Europe. The relationship between the two countries continues to be key for Russia as a supplier and has a profound impact on its relations with Europe. Moreover, the current crisis may test Ukraine’s commitment to adhere to European rules and respect its obligations as a transit country.
The webinar was chaired by Katya Zapletnyuk, editor of ICIS Heren European Gas Markets (EGM), a fortnightly report covering trends and events affecting price movements on European wholesale natural gas hubs. Katya has been covering the European gas sector for seven years with a focus on Russia and Ukraine.
“While Ukraine’s desire to negotiate the price down is understandable, its poor record of respecting contractual obligations undermines its credibility. Transit obligations to Europe will be crucial for Ukraine’s reputation in this crisis and ICIS will keep its readers up to speed with the latest developments,” said Katya Zapletnyuk
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