Gas, Putin, and EU. Russia turns the gas back on in all probability on Monday

Jan. 11 (Bloomberg) -- OAO Gazprom said it’s ready to resume supplies of natural gas to Europe from Russia once an EU-brokered accord on monitoring transit via Ukraine is enacted, potentially ending days of disruption amid freezing temperatures.

Russia’s state-run gas exporter will restart shipments “when the observers are in place,” Sergei Kupriyanov, Gazprom’s spokesman, said by text message today.

Czech Prime Minister Mirek Topolanek, acting for the European Union, secured a three-way agreement enabling monitors to check flows into Ukraine’s pipelines from Russia. Gazprom, supplier of a quarter of Europe’s gas, halted transit on Jan. 7, accusing Ukraine of siphoning fuel after it cut supplies to Russia’s neighbor amid a price and debt dispute. Ukraine denied the charge.

If all “goes well”, the monitors may be in place today, Topolanek told reporters in Prague today. The EU, Russia and Ukraine agreed to provide as many as 25 observers each to the mission.
“Ukraine is going to have to put its cards on the table,” Ronald Smith, chief strategist with Moscow-based Alfa Bank, said today. “It will be apparent who is telling the truth. With the monitors it will be very clear what’s going on. On the pricing side there’s no reason for Ukraine not to pay market-based prices for its gas.”

Serious Situation
Once gas starts to flow in Ukraine, it may take about 36 hours for it to reach EU states, where in some the situation is “serious,” Topolanek said. The Czech Republic has called an energy council meeting for all EU members tomorrow in Brussels, Industry Minister Martin Riman said.
E.ON AG expects full deliveries of gas three days after the fuel enters Ukraine, Kai Krischnak, spokesman for the German utility’s Essen-based E.ON Ruhrgas AG gas division said today. E.ON has “no information” on when Gazprom plans to resume shipments, he said. Poland is yet to receive any news on when supplies may flow via Ukraine, Joanna Zakrzewsk, a spokeswoman for Polskie Gornictwo Naftowe i Gazownictwo SA, said today.

The shutdown renewed calls in the 27-nation EU to develop nuclear power and alternative sources of energy. Fuel supplies are dwindling as temperatures as low as minus 15 degrees Celsius (5 degrees Fahrenheit) in the Balkans spur energy demand.
“Ukraine signed the protocol so that Ukraine is not a barrier for Russia to resume gas deliveries to the European Union,” Timoshenko told reporters after the accord’s signing during the night.

No Confirmation
Gazprom is yet to receive “even a copy” of the document signed in Kiev, the company said in a statement today. Chief Executive Officer Alexei Miller said yesterday flows would resume once the gas producer received confirmation that Ukraine had signed the accord. Czech Prime Minister Topolanek, whose country holds the EU’s sixth-month rotating presidency, said today the agreement is being distributed.

European monitors started arriving in the Ukrainian capital two days ago as they sought to defuse the dispute that has affected at least 20 countries.

One group of observers arrived today in the eastern city of Luhansk near a compressor station and one is en route to a station in the northern town of Sudzha, Valentin Zemlyanskyi, a spokesman for state-run energy company NAK Naftogaz Ukrainy, said by phone today. Three other groups should be in their posts in the south and west of Ukraine by 6 p.m. tonight, he said.
Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. Gazprom halted transit flows on Jan. 7, cutting overall deliveries to Europe were cut by about 60 percent, after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country. Supplies from Russia to Ukraine itself were suspended Jan. 1 pending a new contract.

The Slovak government yesterday approved the restart of a nuclear reactor, in the face of opposition from the European Union, to meet the country’s energy needs as the halt in Russian gas supplies continued.

Prime Minister Robert Fico told reporters the move would be for a “necessary” period until the gas market stabilizes. The reactor in Jaslovske Bohunice was closed Dec. 31 as part of the conditions imposed on Slovakia when it joined the EU.

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