Russia proposes EU companies buy 'technical gas'

16 January 2009

To break the gas transit deadlock for the umpteenth time, Russia has now proposed that European companies buy the gas required for technical purposes to pump the gas (called technical gas) from Russia through Ukrainian pipelines, which at present is the core dispute among other pricing issues with Ukraine.

The gas transit pipeline gas stations in Ukraine requires 20 million cubic meters of technical gas a day for pumping about 140 million cubic meters of gas to Europe.

Italian Prime Minister Silvio Berlusconi  said that Eni-the Italian oil and gas company, would lead a consortium of European companies that would pay for the technical gas for the moment, which can be reimbursed once Russia and Ukraine reach a settlement on the gas dispute.

He added that the reimbursement could be paid back later in gas instead of money but the move would settle the technical gas dispute and get supplies pumped to Europe.

Russia had halted the gas deliveries to Europe through Ukrainian transit pipelines this week as Ukraine insisted that Kiev would take 20 million cubic meters of gas per day from the transit pipeline needed for the pumping stations to deliver the gas to Europe.

Russia has refused to part with the technical gas saying that Ukraine, which is bound by a delivery contract valid up to 2010 to provide the technical gas needed to pump gas to Europe, was siphoning off the gas for domestic use after Russia cut gas supplies to Ukraine on differences over new gas supply pricing contract.