Shell Commences Gas Supply to Ukraine

Shell Commences Gas Supply to UkraineShell Commences Gas Supply to Ukraine

Royal Dutch Shell has begun gas supplies to Ukraine and plans to pump at least 120 to 130 million cubic meters this month, Ukrainian news agency Liga said on Wednesday, quoting a government source.

The agency said Ukraine was receiving the gas via Slovakia at a cost of $253 per 1,000 cubic meters, but did not identify the origin of the gas, Reuters reported.

Ukrainian Prime Minister Arseny Yatseniuk told a cabinet meeting that Shell was among the companies supplying gas to Ukraine. "Shell Energy Europe is operating at a number of trading hubs in Europe and does not disclose details of commercial agreements," a company spokeswoman said.

Ukraine started buying gas from European Union countries in 2013 in a bid to reduce its dependence on Russian gas.

In 2014, Ukraine imported around 5 billion cubic meters (bcm) from EU countries which accounted for about 26 percent of its overall gas imports. Shell is the second global energy firm to pump gas to Ukraine after Norway's Statoil signed a deal last year to sell gas to Ukrainian state firm Naftogaz.

Ukraine, which consumed 42.5 bcm of gas last year, produces about 20 bcm and imports the rest. Yatseniuk told a cabinet meeting on Wednesday that Ukrainian gas consumption could slip to 40 bcm in 2015. Kiev traditionally imports most of its gas from Russia, but last June Russia cut off supplies for six months in the third such clash over pricing and unpaid bills in a decade.

This month Naftogaz and Russian gas exporter Gazprom signed an interim deal for gas for the next three months and Kiev said this would allow it to start storing gas for next winter. Kiev agreed to buy Russian gas at $248 per thousand cubic meters. It paid $329 under the agreement that covered the past winter.