Ukraine Says No To Gazprom

Ukrainian authorities have rejected Russian gas monopoly Gazprom?s bid to rent or buy an underground gas storage facility located near Ukraine?s Western border, the Russian giant announced last week. The facility?s capacity is 5 billion cubic meters.

?Gazprom proposed that the facility should hold Russian gas only, which should not be mixed with Ukrainian gas. Gazprom also wanted to manage the pumping of gas into and out of the storage facility on its own. However, Kiev has refused,? Gazprom said, quoted by the Interfax agency.

Earlier, a source at the Ukrainian Fuel and Energy Ministry told Interfax-Ukraine that the ministry did not believe that Ukraine could benefit from renting the facility, since it might create problems with accounting of gas supplies.

Currently Ukrainian national oil and gas company Naftogaz Ukraine stores Russian gas in Ukrainian storage facilities on the basis of an agreement with Gazprom. Gazprom has to keep some amount of gas in Ukraine?s storage facilities to be able to implement its export contracts. The accumulated gas is used to make up for seasonal fluctuations in consumption.

Ukraine has 13 gas storage facilities with a total capacity of 32 billion cubic meters. The storage facilities are run by Naftogaz? subsidiary Ukrtransgaz.