from...

from http://www.ft.com/intl/cms/s/0/27d51ac0-bcb3-11e3-80f4-00144feabdc0.html#axzz2y1GvznuM
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [email protected] to buy additional rights. http://www.ft.com/cms/s/0/27d51ac0-bcb3-11e3-80f4-00144feabdc0.html#ixzz2y1HBl32j

pril 5, 2014 1:03 pm
Ukraine raises fears of gas price war with Russia
By Roman Olearchyk in Kiev
A pressure gauge is seen at an underground gas storage facility in the village of Mryn©Reuters
Ukraine has warned that it may be on the verge of its third natural gas price stand-off with Gazprom in eight years, raising the possibility that Russian supplies to European markets could once again be disrupted.
Addressing his cabinet on Saturday afternoon amid lingering fears that Russia could launch further military incursions after last month’s annexation of Crimea, Ukraine’s prime minister said “Russia has not managed to grab Ukraine through military aggression, so now they are pursuing a plan to pressure and grab Ukraine through gas and economic aggression.”
Russian gas pipelines
Russian gas pipelines
Main Ukraine export ports for grain
More
ON THIS STORY
Nick Butler How will Putin respond to western pressure?
Gas prices leap on Russia’s Crimea move
Gas price in Europe at lowest since 2010
UK urges end to reliance on Russian energy
In depth Crisis in Ukraine
ON THIS TOPIC
Ukraine and Russia swap terror claims
Tymoshenko seeks western military help for Ukraine
Kerry warns on ‘intimidation’ of Ukraine
Kiev ‘outrage’ over Lavrov proposals
IN EUROPE
Transnistria – frontline in east-west struggle
Russian media stir memories of Soviet era
Book questions King Juan Carlos’s role
Norway scraps oil fund ethics committee
Arseniy Yatseniuk said Ukraine did not accept the price of $500 per 1,000 cubic metres that Russia this week set for its Ukraine-bound gas.
“This price level is of the highest in Europe?.?.?.?it’s political, not economic. Ukraine is ready to continue buying natural gas at the price from last year?.?.?.?that is $268. This is an acceptable and market price,” he said.
Russia in 2009 completely halted gas transit through Ukraine amid a price dispute causing serious disruptions in eastern European gas markets. During the first price dispute in 2006, Ukraine allegedly siphoned EU bound gas for domestic needs after Russia sharply reduced transit flow.
Fears of supply disruptions after Russia took control of Crimea saw the price of UK natural gas, the benchmark European futures contract, leap to 61.7p a therm last month. However, the price has been in retreat ever since. The price of natural gas in Europe is at its lowest level since 2010 as warm weather and high storage levels curb demand for the fuel, but Russia supplies about 30 per cent of Europe’s natural gas, with almost half of it piped through Ukraine.
Warning that the next step of Russia could be to restrict natural gas supplies, Mr Yatseniuk urged his government and Western officials to prepare. He called upon the EU to pressure Slovakia’s gas transit pipeline operator into sanctioning so-called reverse gas transit flow schemes, allowing Ukraine which relies heavily on Russian fuel imports to diversify by importing European market gas.
Russia has not managed to grab Ukraine through military aggression, so now they are pursuing a plan to pressure and grab Ukraine through gas and economic aggression
- Arseniy Yatseniuk
Mr Yatseniuk spoke minutes after the chairman of Gazprom piled further pressure upon his cash-strapped country by announcing that the Russian energy giant would seek $11.4bn in reimbursement from Kiev for gas price discounts from prior years that were unilaterally cancelled this week.
Alexei Miller spoke after the Russian government’s decision this week to annul a 2010 agreement through which Kiev got a gas price reduction in return for prolonging Russia’s right to use a Crimean port as base for its Black Sea naval fleet.
“Russia was paying an advance?.?.?.?therefore, the $11.4 billion is a debt that Ukraine has accrued to Russia,” Mr Miller said.
Kiev is trying to make a $2.2bn outstanding payment to Gazprom.
Mr Yatseniuk said Ukraine would “make all payments for previous gas supplies,” but “political pressure will not pass.”
Mr Yatseniuk said Ukraine could seek to defend its interests through arbitration if gas price talks with Russia failed. “If we don’t agree, there is a procedure foreseen in the agreements,” he said, “appealing to the Stockholm arbitrage.”

gotta be in it to win it