Ukraine’s parliament has given preliminary approval to a draft law that would allow the government to exert tighter control over the energy sector in the face of dwindling natural gas supplies after Russia cut off exports in June 2014.
The draft laws on possible “state of emergency” powers would give the government the right to dictate to gas companies to whom they should supply gas and for how much, irrespective of supply obligations under existing contracts. The proposed legislation appeared to apply to private gas companies as well as the state gas and oil company Naftogaz, Ukraine’s biggest gas importer.
The draft laws are expected to go to parliament for a second reading at the end of July or in August. The parliament also approved, in a first reading, a bill that would allow consortiums with European or US companies to operate Ukraine’s ageing gas distribution system and storage facilities.
Parliament initially rejected the government’s energy proposals, but resumed discussion and took a vote on the two draft laws after speaker Oleksander Turchynov warned that without them many homes could be left without heating in winter.
“There is a risk for millions of our citizens. This is a question of survival,” he warned. “Adoption of this law opens the way to Ukraine to become an energy player,” Yatseniuk said.
Emerging gas war
Russia, Europe’s main supplier of gas via Ukraine, cut off supplies to Ukraine on June 16 in a dispute over unpaid bills. It has also hinted it will take retaliatory trade measures against Ukraine over its signature of a free trade deal with the European Union.
Arseny Yatseniuk, Ukraine Prime Minister urged parliament to give his government the right to declare a “state of emergency” in the energy sector. “Russia is trying to tighten as many screws as possible on us. A gas war has been rolled out against us. The country is on the brink (of energy collapse),” he said.
Andriy Kobolev, head of Ukraine’s state energy company Naftogaz, said that the legislation proposed by the government could help Ukraine get through the winter without Russian gas by reducing consumption by around 20 percent. “We have to cut our gas consumption by approximately 6 billion cubic metres for the season; that is 20 percent. Then we can get through the winter,” Naftogaz said.
He said Naftogaz would advise the government to sell gas domestically at a fixed price and force Ukrainian energy companies producing gas from domestic wells to send half their supplies into Ukraine’s storage facilities.
Frank Uzuegbunam
