Gazprom warns EU over energy, Ukraine

Gazprom warns EU over energy, Ukraine

Gazprom warns EU over energy, Ukraine

‘If someone thinks about blocking the Turkish Stream, it is a very serious mistake,’ says Russia’s Gazprom head Alexei Miller at a conference in Germany. AFP Photo

Russia’s top gas producer Gazprom warned the European Union on April 13 against moves to block Moscow’s plans to bypass Ukraine as a transit country for its gas to Europe and said it needed guarantees on gas purchases.

Russia is pushing ahead with plans to build a pipeline to Turkey and further on to Greece via the Black Sea, in line with its plans to stop exporting gas via Ukraine by 2019.

Moscow had to drop its $40 billion South Stream pipeline via Bulgaria to Europe last year, saying it was blocked by EU regulations, choosing the Turkish Stream project instead.

“If someone thinks about blocking Turkish Stream ... it is a very serious mistake,” Gazprom head Alexei Miller told a conference in Berlin, adding volumes could go to other markets and construction of the pipeline could be paused if necessary.

Speaking to reporters in Berlin, Russian Energy Minister Alexander Novak said Russia did not plan to extend its gas transit deal with Ukraine after the current contract expires in 2019.

Russia supplies around a third of the European Union’s gas demands, though the EU is trying to diversify away from energy supplies from Russia. Relations have cooled over Moscow’s role in the Ukrainian conflict.

Miller said the EU had to show an assurance of future gas purchases from Russia. He said Gazprom could produce 617 billion cubic meters (bcm) of gas per year, while in 2014 output was 444 bcm, leading to excessive idle capacity.

“We don’t hear the main statement that Europe will rely on Russian gas ... We fully bear the risks of creating new production capacities,” he said, warning that the gas which Europe refuses to buy may be diverted to Asia.

Gazprom has clinched a deal to supply China with 38 bcm of east Siberian gas per year starting from 2018.

It also wants to supply an additional 30 bcm annually to China from west Siberia.

Miller also said gas prices for Europe will increase in the final quarter of the year, tracking higher oil prices, while Russian gas exports will increase this year from 147 bcm in 2014 to exceed the previous record of 162 bcm set in 2013.