Dmytro Firtash’s Ostchem holding will purchase 5 billion cubic metres (bcm) of gas to put into underground storage, at a 30-36 percent discount to the price Ukraine pays for Russian gas, the source added, confirming Russian newspaper reports. Gazprom CEO Alexei Miller has said the transit of Russian gas exports to Europe is at risk again due to low levels of gas in underground storage in Ukraine ahead of winter, when cold weather pushes up demand. “This deal with Ostchem will make it possible to increase the level of gas storage in Ukraine and provide for safe passage of Russian gas to Europe,” the source said. Ostchem declined to comment. Gazprom had no official comment. With the extra volumes purchased by Firtash, Ukraine will hold 19 bcm of gas in storage, “the level required to ensure trouble-free gas deliveries to Europe in the 2013-14 winter season,” Alfa Bank said in a note. Gazprom meets a quarter of Europe’s gas needs, and more than half of Russia’s gas exports to the European Union flows across Ukraine. The remainder traverses Belarus or goes via the Nord Stream pipeline under the Baltic Sea to Germany. The issue of Russian gas exports to Europe has come to the fore this week with reports that a London court froze $21.7 million out of a $75.8 million eurobond coupon payment by Ukraine’s state oil and gas company Naftogaz. Ukraine has $10.8 billion of foreign currency debt maturing through 2014. Its foreign currency reserves are just over $20 billion, but they are likely to keep falling, particularly if local Ukrainians try to buy foreign currency. A row between Moscow and Kiev in January 2009 over gas prices and debts led to several weeks of supply cuts that hit eastern European countries tied to Gazprom’s export pipeline network particularly hard. After the row, both countries signed a 10-year supply deal and eliminated Firtash’s company, RosUkrEnergo, from the role of intermediary between Gazprom and Naftogaz NAFTO.UL.
Russia brings back Ukraine gas middleman – source
Russia’s consumer protection agency cited quality concerns in an announcement of the suspension, which could hit Lithuanian producers hard. According to Russian figures, 85 percent of the small Baltic nation’s dairy exports go to Russia. The suspension adds to tension between Russia and Lithuania, which currently holds the EU presidency and is hosting a summit in late November promoting closer trade ties with six ex-Soviet states that are not members of the 28-country bloc. Moscow is building its own trade alliance with former Soviet republics and is reluctant to see its neighbors, particularly Ukraine, slip further out of its sway by signing free-trade and political association agreements with the EU. Lithuania, which borders the Russian exclave of Kaliningrad and joined the EU in 2004, has had transport trucks held up at Russian customs for up to 20 days at a time in recent weeks, causing heavy losses for its freight industry. Taking aim at another sector, the Russian consumer protection agency Rospotrebnadzor said inspections of Lithuanian dairy imports had revealed “numerous violations” of quality and sanitary standards in products including cheeses and yoghurt. “We are seeing a sharp weakening of (Lithuania’s) position on protecting the rights and safety of consumers,” Rospotrebnadzor chief Gennady Onishchenko said, according to the Interfax news agency. Lithuania exported dairy products worth $193 million to Russia last year, according to the Russian National Milk Producers’ Union – the vast majority of it cheese that is found on many shop shelves. Russia is also stepping up monitoring of Lithuanian meat and fish imports, state-run news agency Prime reported, citing an unidentified source. Rospotrebnadzor declined to comment. POLITICAL PRESSURE Onishchenko regularly denies any geopolitical motives, but past bans on products from ex-Soviet republics – such as wine and mineral water from Georgia – have been widely seen as a form of political pressure. In Brussels, the European Commission said it had “complete confidence” in the quality of Lithuanian dairy products and called for discussions with the Russian side. “The EU has the most stringent system in the world when it comes to food safety,” Frederic Vincent, Commission spokesman for health and consumer policy, told a regular press briefing. Of the 15 former republics that became independent states when the Soviet Union disintegrated in 1991, only the Baltic states of Lithuania, Latvia and Estonia have joined the EU. But the EU’s Eastern Partnership policy, designed to draw six other ex-Soviet states closer to the European fold, has run up against President Vladimir Putin’s efforts to revive Moscow’s sway by promoting closer ties among its former vassals.
Russia halts Lithuanian dairy imports before EU summit
Russian Foreign Minister Sergei Lavrov said Monday after meeting with U.S. Secretary of State John Kerry (on the sidelines of an economic summit in Indonesia) that Iran likely wants “more clarity” about the way forward. “Iran probably wants more clarity,” Lavrov said. “More specific steps to be spelled out on the road to the result which we all want to achieve. And I think this will be discussed next week in Geneva, a meeting to which Iran agreed. And to which Iran and three plus three are getting ready in a very constructive mood, as our contacts in New York show.” Kerry said the United States is encouraged by Iran’s recent outreach efforts, but that actions, and not words, are what will make a difference. “So what we need are a set of proposals from Iran that fully disclose how they will show the world that their program is peaceful,” Kerry said. “And we have made it clear that if there are those indicators, the United States and our allies are absolutely prepared to move in appropriate ways to meet their actions. Kerry said Iran has not responded to an offer the P5+1 group made earlier this year, which called for Iran to stop enriching uranium to 20 percent and halt enrichment at one of its nuclear facilities. Iranian Foreign Minister Javad Zarif said Sunday that offer was no longer valid, and that the P5+1 should come to next week’s negotiations with a “new point of view.” Iran says its nuclear program is strictly for peaceful purposes and wants the international community to lift a range of sanctions imposed for its refusal to halt enrichment activity. The possible threat of a ballistic missile strike from countries like Iran has led the United States to plan a missile shield in Europe. Russia disagrees with the move, saying the system could neutralize its own strategic missile force and leave it vulnerable to the West. Kerry said Monday it is too early to make determinations about the system as long as the Iranian threat continues. But he said the U.S. and Russia are continuing to talk about the plan and are trying to work out a way that meets the needs of both countries.