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Ukraine says Russian gas supply to Europe falls

  Russian gas transit to Europe via Ukraine fell 43.4% in February to 6.4 billion cubic meters from 11.3 billion cubic meter (bcm) in February 2008 due to low demand, Ukraine’s fuel and energy ministry said on Tuesday.

The ministry said gas transit totaled 11.1 bcm in the first two months of this year against 23.7 bcm in the same period in 2008.

“Europe is no longer taking Russian gas as it was before,” Inna Koval, spokeswoman for Ukraine’s gas transit monopoly Ukrtransgas, said. In 2008, Russian gas transit through Ukraine rose 3.8% to 119.6 bcm from 115.2 bcm in 2007.

Russian giant Gazprom says it expects sales to recover in Europe in the Q2 when gas prices fall from current peaks. Gas prices are adjusted to oil and refined products prices with a lag of six to nine months.

The flow of Russian gas to Europe was interrupted for three weeks in January in a row between Ukraine and Russia over pricing and payment arrears. Ukraine generally handles about 80% of Russian gas transit to European customers.

Ukraine’s state-run gas and oil company Naftogaz also said the ex-Soviet state planned to reduce gas imports from Russia, but declined to comment on how the decrease in Russian transit to Europe could affect its revenue this year.

Naftogaz was at the heart of a gas pricing dispute with Russia that led to gas supply cuts for millions in Europe before Prime Minister Yulia Tymoshenko clinched a supply deal with a considerable rise in prices for Ukraine.

Naftogaz said Ukraine planned to import about 33 bcm of gas this year compared with 47.9 million in 2008. Naftogaz imported an average of 55 bcm in previous years.

“According to our calculations, overall gas consumption in Ukraine will total 55.9 bcm this year. Imported gas will total 33 bcm, Ukrainian gas - 20.6 bcm. Other needs will be covered by gas from our underground storages”, Naftogaz said in a statement.

In January, Ukrainian authorities said 2009 gas imports should total 40 bcm, but Russian Prime Minister Vladimir Putin this month said Russia would levy no fines on Ukraine for not taking the contracted volumes of gas in February.

Naftogaz’s acting head, Ihor Didenko, said in an interview published in a weekly that the contract allowed for Gazprom and Naftogaz to decide on the supply volumes by July 1. (Reuters)