Germanys RWE to Supply Gas to CrisisHit Ukraine

Germany's RWE to Supply Gas to Crisis-Hit Ukraine

April 15, 2014
RWE, Germany's second-biggest power supplier, says it will start gas deliveries to Ukraine as Russia threatens to cut off supplies to Kiev.

FRANKFURT, Germany -- RWE (IW 1000/58), Germany's second-biggest power supplier, said on Tuesday it will start gas deliveries to Ukraine as Russia threatens to cut off supplies to Kiev.

"RWE -- via its trading subsidiary RWE Supply & Trading -- is the first European supplier to commence gas deliveries to the Ukraine in 2014," the German group said in a statement.

The deliveries are part of an existing five-year framework agreement signed in May 2012 that allows RWE to ship up 10 billion cubic meters of natural gas a year to Ukraine, but the gas supplies must be agreed on annually.

Last year, RWE supplied about one billion cubic meters of gas to Ukraine.

The deliveries, to be transported to Ukraine via Poland, are known as "reverse flows" because normally the gas comes from Russia and is transported in the other direction to Europe via Ukraine.

In its statement, RWE said it is immediately restarting deliveries to Naftogaz, Ukraine's state-owned company, with gas from its pan-European portfolio.

Ukraine now has to pay $485 dollars for 1,000 cubic meters of gas, the highest rate paid by any of Gazprom's European clients.

Russia says Ukraine now owes it $2.2 billion (1.6 billion euros) for natural gas supplies, and Gazprom has demanded that Kiev take immediate measures to settle the debt.

Russian President Vladimir Putin has also sent a letter to EU leaders expressing "extreme concern" over the debt and warning that supplies to Europe may be affected.

Gazprom is taking a dim view of the "reverse flow" solution.

In a recent interview with Russian television, Gazprom chief Alexei Miller said the European companies involved "should examine very closely the legality of this type of operation."

Copyright Agence France-Presse, 2014

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