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Russia, Ukraine agree oil deal to avert supply cut

Russia, Ukraine agree oil deal to avert supply cut

Write: Kishore [2011-05-20]
KIEV/MOSCOW, Dec 29 - Ukraine and Russia have signed a deal on oil transit for 2010, allaying fears of supply cuts to Europe, in a deal Ukrainian state energy firm Naftogaz says will require Moscow to pay 30 percent more in transit fees.

Russia said on Monday it had agreed terms for a new oil deal with Ukraine a few hours after spooking Europe with a warning the continent could face oil supply cuts because of a dispute between Moscow and Kiev. [ID:nLDE5BR0RM]

"The rate has been increased by 30 percent," a Naftogaz spokesman said on Tuesday. "There will be no crisis. We signed an agreement last night."

Russian Energy Ministry spokeswoman Irina Yesipova confirmed that a deal had been struck providing for four potential tariff rates. "The basic one is 6.6 (euros per tonne)," she said.

Europe, which receives much of its oil and gas from Russia, has closely tracked disputes between Russia and its neighbours after EU gas supplies were cut in the dead of winter in 2006 and 2009 due to rows between Russia and Ukraine.

"I am also very glad to note that the Russian and Ukrainian sides have meanwhile found an agreement avoiding a disruption of oil supplies to the EU," EU Energy Commissioner Andris Piebalgs said in a statement.

Naftogaz did not specify the oil tariff that Russia had agreed to pay. A Ukrainian government source also told Reuters the tariff would be 6.6 euros ($9.50) per tonne of oil for the entire journey through Ukraine in 2010 against $7.8 this year.

This would be a 21.8 percent increase in dollar terms. Ukrainian officials were not able to explain the discrepancy between the two percentage figures, which may be due to currency conversions.

Ukrainian officials have said switching to euro payments from the dollar had been one of their demands.


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Russian Prime Minister Vladimir Putin, in the Far East to open a new Pacific oil terminal, said Moscow was seeking to diversify its export channels in a bid to avoid problems with transit states, including Ukraine.

"We have long argued about the problems of gas supplies via Ukraine and other transit countries. We understand very well and now all our main consumers have also understood where the problem lies," Putin told reporters in the city of Vladivostok.

"The problem lies in the fact transit countries abuse their position," he said. "They create a grey market for re-sale, for re-export of our energy resources."

His comments were aimed mainly at gas transit. Asked specifically about oil, Putin said: "We have a contract. We hope it will be fulfilled."

The Ukrainian government source said Kiev and Moscow had agreed that the volume of oil -- going amongst others to Slovakia, the Czech Republic and Hungary -- would be 15 million tonnes next year.

Russia transported 17.1 million tonnes of oil in 2008. The figure for this year is as yet unknown.