Gas Stuck in Ukraine Hampered Gazprom’s Reputation, Miller Says

Gas Stuck in Ukraine Hampered Gazprom's Reputation, Alexey Miller Says

Alexey Miller, Chairman of the Gazprom Management Committee reported today to Russian President Dmitry Medvedev on the progress with the South Stream project.

“It is a very timely project. Besides the evident growth in gas transit reliability, it will considerably enhance our capabilities to flexibly adapt to changes of demand for energy carriers in Europe. It is an important factor of Russian gas competitiveness in European markets,” said Alexey Miller.

So far, the Consolidated Feasibility Study of South Stream has been completed. The Consolidated Feasibility Study integrates the feasibility studies of the gas pipeline offshore section and of the respective national sections in Southern and Central Europe.

Once Turkey granted the permit for South Stream construction and operation in its economic zone, Gazprom updated the project implementation schedule and is ready to start constructing it in December 2012.

According to Alexey Miller, Gazprom took every possible effort to satisfy European consumers’ increased demand during the unprecedented cold snaps that had bound the Danube River and the Venetian canals with ice. However, considerable amounts of gas transited via Ukraine didn’t reach Europe. “On some days, up to 40 million cubic meters of gas were stuck in Ukraine. No doubt that it inflicted both financial and reputational damage on Gazprom.” Meanwhile, there is no efficient mechanism to control the behavior of Naftogaz Ukrainy in such a situation,” emphasized Gazprom CEO.

During the meeting, it was noted that when designing the South Stream gas pipeline its throughput had been dependant on the negotiations with the Ukrainian partners in the gas sector. Considering the current status of gas transit via Ukraine, Dmitry Medvedev ordered Gazprom to be guided by the maximum annual throughput of 63 billion cubic meters when designing and constructing the South Stream gas pipeline. Gazprom was also tasked to continue negotiating gas issues with Ukraine.

Source: Gazprom, February 23, 2012

 

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