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Ukraine suspending Russian gas imports for rest of year-paper

Tuesday, 12 Nov 2013 | 5:37 AM ET

KIEV, Nov 12 (Reuters) - Ukraine is unlikely to resume Russian gas imports suspended in a pricing row before the end of the year, but has enough in storage and can sustain deliveries to Europe, the Kommersant daily said on Tuesday.

The Russian-Ukrainian dispute has raised fears of a new 'gas war' reminiscent of the winters of 2006 and 2009 which disrupted onward supplies across Europe. Tensions have been compounded by a Ukrainian-EU free trade agreement that Kiev is due to sign this month despite Russian opposition.

Kommersant said it expected the Ukrainian gas transport monopoly Ukrtransgaz to cope with winter demand without further purchases from Russia's Gazprom which accuses Ukraine of failing to pay for August deliveries in full.

"The source from Ukrtransgaz assures that Naftogaz does not plan to buy more Russian gas this year," it said.

Moscow-based Alfa Bank echoed the sentiments in a note.

"Gas storage facilities (both European and Ukrainian) are almost full. And, thanks to unusually warm weather in Europe, we do not expect any significant increase in gas consumption that could lead to a supply disruption," it said.

The decision by the Ukrainian state oil and gas company Naftogaz last Friday to suspend imports would be reviewed only if there were exceptionally cold weather in the former Soviet republic, the newspaper said, quoting a Ukrtransgaz source.

Local distributing companies have already been supplied with gas from storage and Naftogaz does not foresee the need for any significant imports from Russia's Gazprom, Kommersant said.

Ukraine, which plans to import 27.3 billion cubic metres of gas this year for its own needs, including 26 bcm from Russia, had about 19 bcm of gas in underground storage vaults as of the end of October.

The stoppage emerges just weeks before Kiev is due to sign a free-trade agreement with the European Union. Russia, which says its trade could be undermined by the Ukrainian-EU agreement, wants Ukraine to join a Moscow-backed customs union.

Ukraine, which pays around $400 per 1,000 cubic metres of Russian gas, one of the highest prices in Europe, has asked Moscow to ease terms it considers excessive and unaffordable for its debt-strapped economy. It has been steadily reducing its Russian gas intake.

An industry source in Ukraine said on Monday that the country had been sending around 219 million cubic metres (mcm) of Russian gas per day to EU consumers.

At the same time, Ukraine gets around 4.4 mcm per day from Poland and 4.0 mcm per day from Hungary, both EU members.

Naftogaz has declined to comment on the suspension of imports.

Kommersant said the firm, which owes Gazprom about $800 million for previously imported gas, did not have the financial resources to continue paying for Russian gas for now.

Ukrainian tycoon Dmytro Firtash, who has agreed to purchase 5 billion cubic metres (bcm) of gas to put into underground storage at a 30-36 percent discount, would continue receiving gas from Russia, it said.

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