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GISMETEO.RU
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Nation    

Boyko downplays Nord Stream natgas impact
Journal Staff Report

KIEV, Sept. 7 – Ukraine will continue to be Europe’s key natural gas shipper for years to come even after the launch of Russia’s Nord Stream pipeline connecting Russia and Germany, Energy Minister Yuriy Boyko said Wednesday.

Boyko reacted to comments by Russian Prime Minister Vladimir Putin on Tuesday that the launch of Nord Stream means Ukraine is finally losing its “exclusive” status as a transit country for Russian gas.

Boyko said the drop of gas shipments via Ukraine will be “insignificant” due to continued strong demand for energy in Europe.

“Taking into account the growing gas consumption in Europe, we expect that volumes of our gas shipment will drop insignificantly,” Boyko said at a press conference.

The comments suggest that both Russia and Ukraine view as strong their positions just as gas price dispute between the two may escalate.

This increases the chance that the parties may flex their muscles and resort to a confrontation that may result in disruptions of gas supplies to the European Union.

Prime Minister Mykola Azarov on Wednesday called on Ukraine to take extra steps to save energy by October 1 amid a deadlock in talks with Russia over lower natural gas prices.

Ukraine, currently the major shipper of Russian gas to Europe, is moving about 80% of Russia’s Europe-bound gas. Russia meets 25% of Europe’s gas demand.

Ukraine is expected to earn $2.7 billion in 2011 from gas shipment services it renders to Gazprom, according to Ukrainian officials.

Any significant decrease is Russian gas shipments via Ukraine means lost revenue for Ukraine that may weaken the country’s economic and political power, some officials have warned.

Ukraine’s transit of Russian natural gas to markets in Europe rose 7% on the year in August, according to Naftogaz Ukrayiny.

In January through August Ukraine’s transit of Russian gas to Europe rose 13.8% year-on-year to 70 Bcm, compared with 61.5 Bcm shipped in the same period of 2010, the company said.

“Overall, today we ship more gas than last year,” Boyko said.

The 765-mile long Nord Stream -- costing more than $12 billion -- directly links Russia and Germany via the Baltic Sea, and will take about a month to fill it with gas before clients in Europe get their supplies, according to Gazprom.

Yuriy Korolchuk, a senior analyst at the Kiev-based independent Energy Research Institute, agreed that Ukraine will continue to play major role as the gas shipper due to growing demand for gas in Europe.

“That is Putin’s wishful thinking,” Korolchuk said. “Ukraine will continue to be the main transit nation for Russian gas to the EU for a long time to come.”

Russia is expected to deliver 155 billion cubic meters of gas to Europe in 2011, of which 110 Bcm will be shipped via Ukraine, according to Korolchuk.

Europe’s gas demand is expected to increase to up to 700 billion cubic meters annually by 2020, up from 530 Bcm/year in 2010 and up from 360 Bcm/year in 1995, according to Korolchuk.

Nord Stream will be able to ship up to 28 Bcm/year of gas from Yuzhnorusskoye gas field in Yamal region of Russia, Korolchuk said.

“The market will easily swallow gas supplied by Nord Stream,” Korolchuk said. “So, Ukraine does not have to worry about it. It is Russia that will have to worry how to meet that growing demand, which may turn out to be a problem.”

Meanwhile, Azarov called on Ukraine to take extra steps to save energy by October 1 amid a deadlock in talks with Russia over lower natural gas prices.

“We ask our citizens to do everything they can to save energy,” Azarov said addressing a government meeting. “A closed window, a warm door and efficient use of a gas range is the matter of patriotism and survival.”

Azarov ordered all energy companies to get 100% ready for the winter season by October 1, and regional governments must report by October 10 of the measures taken.

First Deputy Prime Minister Andriy Kliuyev was Wednesday appointed to be in charge of the energy saving measures across Ukraine to “deploy all available resources” at the government’s disposal, Azarov said. (tl/ez)




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