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Wednesday, March 25, 2009

Gazprom warns Ukraine over changes to gas transport system

MOSCOW, March 25, 2009 (RIA Novosti) - Russia's Gazprom warned on Wednesday that any changes made to Ukraine's natural gas transport network without Russia's approval will affect European supply contracts. Russia's leadership has reacted furiously to plans discussed by Ukraine and the European Union earlier this week, without Russia's participation, on modernizing the Ukrainian gas grid. Gazprom official Oleg Aksyutin told reporters: "In view of the level of integration of our gas transport system and the fact that Ukraine's gas transit system is an inseparable part of Gazprom's gas export regime and our export contracts, Gazprom must approve any work relating to changes in the throughput capacity of Ukraine's pipelines." Prime Minister Vladimir Putin on Monday threatened to review ties with the EU if it goes ahead with the plans without Russia's involvement, and President Dmitry Medvedev said the following day that inter-governmental talks with Ukraine had been suspended until the issue is resolved. Aksyutin, who heads Gazprom's department for gas transport and underground storage, said any unauthorized changes to the transport system will have an impact not only on Russia's export contracts with European states, but also on Russian and Central Asian gas production. Ukraine, the EU and several banks signed a pledge of cooperation in Brussels on Monday to encourage investment and avoid a repeat of the dispute at the start of the year, which resulted in a temporary cut-off in Russian gas supplies. Russia, which transits about 80% of its Europe-bound gas via Ukraine, said it was excluded from the talks. Under the agreement, the EU endorsed Ukraine's plan to modernize its Soviet-era pipelines and underground storage facilities, and to build new gas metering stations. The EU pledged 2.5 billion euros ($3.4 billion) on the condition Kiev reform the sector to make it more open and transparent. Ukraine also asked the EU to help build two more pipelines to increase the network's capacity by about 60 billion cubic meters to 200 billion cu m, a project it earlier estimated at $5.5 billion. Kiev says this would be cheaper than building long-distance gas pipelines, such as Nabucco promoted by Europe and the Nord Stream and South Stream projects Russia has been pushing for.

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