Ukraine says Russian gas too pricey, sticks with EU

Ukraine said Friday it would not purchase natural gas from Russia at the price offered by Moscow and would instead tap European markets as it continues its shift toward the West.

Analysts called the announcement a sign that Russia's ability to use its natural resources as a weapon against uncooperative neighbours is waning -- and that Europe's bid to grow its own gas supply chain is slowly starting to work.

The head of Russian gas giant Gazprom said Tuesday that he had received a request from Ukraine's state energy company to resume deliveries that were halted in November over a delivery costs row.

The two former Soviet republics -- locked in a bitter feud since Moscow's March 2014 annexation of Crimea -- have had repeated price disputes that have occasionally resulted in disruptions of gas flows through Ukraine to Europe.

Ukraine's Naftogaz state company confirmed that it had offered Gazprom a chance to be one of its "potential suppliers", but stressed it would only resume purchases at an advantageous price.

Naftogaz's business development director Yuriy Vitrenko said Russia's energy minister had proposed selling gas to Ukraine for $177 (157 euros) per 1,000 cubic metres in the third quarter of the year.

"With corrections for (the fuel's) energy content, that would make the contract price at around $182 or $183," Vitrenko wrote on Facebook.

Vitrenko said the current German NCG spot market rate was $173. Russia prefers to fix a specific price into long-term contracts with its clients that are subject only to minor adjustments.

"We will never buy gas from Gazprom on these conditions," Vitrenko wrote.

Ukraine has been steadily weening itself off its Russian energy dependence as it establishes closer relations with Western countries in the wake of its February 2014 pro-EU revolution.

Russia supplied 14.5 billion cubic metres of gas to its western neighbour in 2014.

That figure plunged to 6.1 billion cubic metres last year.

Ukraine's purchases from EU countries soared from 5.1 to 10.3 billion cubic metres over the same span.

- Russia's fading gas strength -

About 15 percent of the gas consumed by EU countries flows from Russia through Ukraine.

Ukraine and its allies have repeatedly accused Russia of wielding energy as a weapon against neighbours that have considered establishing closer ties with the West.

Russia slashed Armenia's gas price in 2013 in response to the Caucasus state's decision to join a Moscow-led customs union the Kremlin hopes to develop into a rival to the 27-nation EU bloc.

But some analysts say those days are fading because new interconnecting pipelines being laid across the European Union are allowing countries to diversify their supply base.

"There was a time when Russia could manipulate other countries with its natural gas supplies," US-based intelligence firm Stratfor wrote in a report released Thursday.

"It still can, but the threat is less effective than it once was."

Ukraine has built up its dependence on Slovakia and Poland for both purchases and transports from other states.

Stratfor estimated Ukraine "can import up to 20 billion to 25 billion cubic meters of natural gas annually from eastern Europe".