April 15, 2015 / 10:16 AM / 4 years ago

REFILE-UPDATE 2-Shell starts gas supplies to Ukraine

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KIEV, April 15 (Reuters) - Royal Dutch Shell has begun gas supplies to Ukraine and plans to pump at least 120 to 130 million cubic metres 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 metres, but did not identify the origin of the gas.

The energy ministry could not be reached for immediate comment, but 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 metres (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.

“The drop is partly due to the fact that Russian military aggression began in Ukraine and this affected industrial firms, which were gas consumers. The second factor is the drop in gas demand from households thanks to energy efficiency,” he said.

Energy Minister Volodymyr Demchyshyn was quoted by the Interfax Ukraine news agency as saying Ukraine planned to increase imports of natural gas to 25 bcm in 2015 from 19.5 bcm last year. He gave no additional details.

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 metres. It paid $329 under the agreement that covered the past winter. (Reporting by Pavel Polityuk; additional reporting by Natalia Zinets; editing by Jason Neely)

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