Ukraine-Moscow gas deal reached; Lithuanian gas terminal to end dependency on Russian energy

Global Business

Moscow and Kiev on Thursday clinched a deal that will guarantee that Russian gas exports flow into Ukraine throughout the winter despite their intense rivalry over the fighting in eastern Ukraine.

In a signing ceremony following protracted negotiations, the two sides promised to get the gas flowing into Ukraine again after a long and bitter dispute over payments. European Union energy chief Guenther Oettinger said “we can guarantee a security of supply over the winter,” not only for Ukraine but also for the EU nations closest to the region that stood to suffer should the conflict worsen.

European Commission President Jose Manuel Barroso announced the agreement between the two sides.

“There is now no reason for people in Europe to stay cold this winter,” he said.

The agreement long hinged on the question of whether Ukraine was in a position to come up with the necessary cash to pay for the gas.

Oettinger said it could and that $4.6 billion deal should extend to the spring, calling the deal “perhaps first glimmer of a relaxation in the relations between neighbors.”

Ukrainian Prime Minister Arseniy Yatsenyuk said the amount his government would pay for Russian gas would fall in line with global oil prices, which have tumbled in recent weeks. Yatsenyuk said at a Cabinet meeting in Kiev that Ukraine could pay $365 per 1,000 cubic meters from the start of next year, down from the $385 rate agreed earlier this month. He said that figure may be adjusted downward to $378 until the end of the year.

Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, agreed earlier this month on the broad outline of a deal, but financial issues, centering on payment guarantees for Moscow, have since bogged down talks. But with each week, the need for a resolution becomes more pressing, since winter is fast approaching in Ukraine, where temperatures often sink below freezing for days.

Russia cut off gas supplies to Ukraine in June after disputes over Russia’s annexation of Crimea in March. Ukraine since then has been relying on gas transfers from other European countries and its own reserves. EU Commission President Jose Manuel Barroso conferred “a number of times” Wednesday with Poroshenko in Kiev, stressing that “an agreement was within reach,” a Commission statement said.

The EU has said previously that Ukraine would settle its energy debt to Russia with a $1.45 billion payment by the end of the month and $1.65 billion more by the end of the year. It has said for new gas deliveries, Ukraine would pay $385 per 1,000 cubic meters, which Russia should deliver following advance payments by Ukraine.

Story compiled from Associated Press

CCTV America’s Jack Barton reports.

Ukraine-Moscow gas deal reached

Moscow and Kiev on Thursday clinched a deal that will guarantee that Russian gas exports flow into Ukraine throughout the winter despite their intense rivalry over the fighting in eastern Ukraine.


Lithuania’s new liquefied gas terminal to end country’s dependency on Russian energy

The Lithuanian President, Dalia Grybauskaite, said the country will soon be able to survive without Russian natural gas after the opening of a new Liquefied Natural Gas terminal. The project is aimed at ending Lithuania’s dependency on Russian firm Gazprom, which is the country’s only supplier of gas. Russia says the project would raise energy prices. CCTV America’s Tom Barton reports.

It was a hero’s welcome for ‘Independence’, Lithuania’s new floating Liquefied Natural Gas terminal. It’s hoped the vessel will mean energy independence from neighboring Russia.

“So, we did not only do a project which will secure our energy supply, we did a project of geopolitical security for ourselves, not only in energy and economy, but also for political our independence to be secure,” Grybauskaite said.

‘Independence’ is part of a growing architecture of liquefied natural gas, storable and transportable in super-cooled liquid form. That’s a threat to the market share of Russia’s pipelines, snaking their way west to Europe.

Russia supplies are around 30 percent of Europe’s natural gas. EU diplomats are keen to diversify away from Moscow, a supplier which has angered them over its actions in Ukraine, and raised concerns that it could once again turn off the gas taps.

Publicly Russian state energy giant Gazprom said little, aside from dismissing the project as expensive, saying Lithuanians can pay more for their gas if they want. In Moscow, the talk is still of whether to reduce gas supplies to Europe.

“If we start switching off supply to our consumers. I don’t think it will get to that. And I have doubts that the Europeans will choose to freeze in the winter,” said Vladimir Levchenko, a Russian business analyst.

Now Lithuania said it is no longer worrying about freezing because of Russian supply cuts. Their gas contract with Russia runs out at the end of 2015, and in an example of breaking the Kremlin’s grip on energy, they may not renew it at all.

Lithuanian gas terminal to end dependency on Russian energy

The Lithuanian President, Dalia Grybauskaite, said the country will soon be able to survive without Russian natural gas after the opening of a new Liquefied Natural Gas terminal. The project is aimed at ending Lithuania's dependency on Russian firm Gazprom, which is the country's only supplier of gas. Russia says the project would raise energy prices. CCTV America's Tom Barton reports.

For more discussion on Lithuania’s major step towards energy security, CCTV America interviewed the ambassador from Lithuania to the United States, H.E. Zygimantas Pavilionis.

H.E. Zygimantas Pavilionis, Lithuanian ambassador to US discusses new liquefied gas terminal

For more discussion on Lithuania's major step towards energy security, CCTV America interviewed the ambassador from Lithuania to the United States, H.E. Zygimantas Pavilionis.