No More Oil Transit Through Ukraine, Say Russia, Starting January

[stepanstas]

UPDATE 2-Russia fears gas problems with Ukraine, stops oil

* Russia scraps oil exports via Ukraine's port in Jan

* Gazprom says Ukraine has cut gas purchases

* Says situation with gas payments "very alarming"

(Adds Miller quotes, background)

By Gleb Gorodyankin and Dmitry Zhdannikov

MOSCOW, Dec 25 (Reuters) - Russia has scrapped January oil exports via Ukrainian ports and also said it fears Ukraine will have problems paying for its gas, a sign of a possible repeat of New Year gas rows which have led to supply cuts in Europe.

Europe, which receives 25 percent of gas from Russia, was left short of supplies in January 2006 and 2009 because of pricing rows between Moscow and Kiev.

Another key transit state, Belarus, cut Russian oil flows to Europe in January 2007, also due to a pricing row, which further undermined the image of Russia, the world's largest oil and gas producer, as a reliable energy supplier.

Analysts have said Moscow is unlikely to be tough on Kiev this year ahead of Ukraine's presidential election in January in the hope Ukraine chooses a relatively pro-Russian leader.

Ukraine has been regularly paying its gas bills this year, but the December bill, due before Jan 11, was expected to soar to $1 billion from $770 million in November due to low temperatures.

However, despite the expected rise in cold weather demand, Russian gas export monopoly Gazprom (GAZP.MM) said on Friday Ukraine had cut gas purchases in recent days.

"We assess the situation with payments for Russian natural gas deliveries in December as very alarming," Gazprom's chief executive Alexei Miller told state television.

"In the middle of December, there was a trend of a reduction of gas off-take which confirms that Ukraine is facing serious difficulties with (future) gas payments," Miller said.


NO CRUDE FOR YUZHNY

Russia ships 80 percent of its gas transit to Europe via the territory of Ukraine while the rest goes via Belarus.

Russian oil transits via Ukraine are less big but are still very important for the Mediterranean markets.

Traders said on Friday Russia's pipeline monopoly Transneft told oil firms to scrap oil export plans via Ukraine's Black Sea port of Yuzhny and gave no reason for the move.

"All volumes have been taken away. There will be no supplies in January (from Yuzhny)," said one trader, who asked not to be named because he is not allowed to comment on the issue.

"It will become clear on Monday what options will be proposed (by Transneft)," said another trader.

Oil firms will have to divert some 0.5 million tonnes of crude meant for Yuzhny to other destinations - such as Russia's Black Sea port of Novorossiisk or Primorsk on the Baltic.

Affected firms will include Rosneft (ROSN.MM), TNK-BP (TNBPI.RTS) and Tatneft. One cargo was already sold to Morgan Stanley for Jan 8-12 delivery and rerouting it to another port will cause big logistical problems, traders said.

Yuzhny remains the last Ukrainian port through which Russia sends transit crude to the West after it stopped exporting crude via another outlet - Odessa - earlier this year. In 2008, Odessa and Yuzhny sent over 15 million tonnes of Russian transit crude - enough to feed a large refinery for a year. (Writing by Dmitry Zhdannikov; Editing by Matthew Jones)

I guess we saw this day coming.

[stepanstas]

Update

Russia, Ukraine end oil transit dispute

KIEV, Ukraine

Ukraine and Russia resolved a dispute over oil shipment tariffs Monday, ensuring there would be no disruption in supplies to Eastern Europe over the New Year holiday, the Russian Energy Ministry said, according to a news agency.

The preliminary agreement over transit prices will be finalized and signed "within days," ministry spokeswoman Irina Esipova told the ITAR Tass news agency, without giving details of the new deal.

"New Year's Eve will pass without disruption or unpleasant situations," she was quoted by the agency as saying.

Russia has warned of possible disruption of oil shipments to Slovakia, the Czech Republic and Hungary, saying Ukrainian state energy company Naftogaz was seeking higher transit tariffs to reflect inflation and maintenance costs.

Earlier on Monday, Ukrainian presidential aide Bogdan Sokolovsky had downplayed the possibility of a supply disruption, calling the Russian warning "political blackmail" and saying European customers had "no reasons to worry."

A year ago, Russia halted gas supplies through Ukraine for two weeks amid a price dispute with Kiev, resulting in a two-week supply cutoff to some Eastern European customers beyond Ukraine. Millions Europeans were left without gas for two weeks in January.

[stepanstas]

PM: No reason to worry about Ukraine’s ability to pay for natural gas

KANIV, Cherkasy region, Dec. 28 - Prime Minister Yulia Tymoshenko said she sees no reasons for Moscow to worry about Ukraine's ability to pay for natural gas imports from Russia.

"We have heard such statements at the end of every month for at least a year, and we, Ukraine, are confidently and steadily managing our financial affairs amid the crisis," Tymoshenko said at a Saturday news conference in Kaniv, the Cherkasy region, in commenting on Gazprom CEO Alexei Miller's Friday remark.

[stepanstas]

Oil Drops From Five-Week High as Russia, Ukraine Reach Accord

Dec. 29 (Bloomberg) -- Crude oil fell from near a five-week high as Russia reached an agreement with Ukraine on oil exports to Europe, allaying concerns of a supply disruption.

Russia agreed to pay 30 percent more to transport oil to Europe via Ukraine next year, according to Ukrainian state energy company NAK Naftogaz Ukrainy. Crude climbed to a five- week high yesterday as Iran, holder of the second-largest oil reserves, continued a crackdown on political protests.

“This takes one of the geopolitical risks off the table, I assume there’s not going to be a disruption in Russian flows to Europe,” said Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland. “If prices are still $78 to $80 at the start of next week there should be some downward pressure as stocks are so plentiful.”

Crude oil for February delivery declined as much as 50 cents, or 0.6 percent, to $78.27 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $78.69 at 12:55 p.m. London time. Oil gained 72 cents to $78.77 yesterday, the highest close since Nov. 18.

Futures have advanced 77 percent this year and tripled in the past decade.

Brent crude for February settlement was at $77.31 a barrel, down 1 cent, on the ICE Futures Europe exchange at 12:55 p.m. local time. It rose $1.01, or 1.3 percent yesterday, to $77.32 a barrel.

[stepanstas]

UDPATE 1-Ukraine says paid off all debts due in 2009

* Finance ministry: almost $5 billion debts paid up on time

* Ukraine avoids default but Naftogaz had to restructure

* Russian gas bill expected to be paid on time

KIEV, Dec 30 (Reuters) - Ukraine's finance ministry said on Wednesday it had paid off all domestic and foreign debt due this year worth 39.6 billion hryvnias ($4.96 billion) on time and in full.

Analysts and investors had feared all year that Ukraine could have defaulted on some of its debt, given that its chaotic politics combined with a dependence on steel exports have left it particularly vulnerable to the global economic crisis.

The former Soviet state has been often at the centre of rows with Moscow over gas prices and unpaid gas bills, which in 2006 and 2009 led to EU gas supplies being cut in the dead of winter.

Ukraine has been surviving on a $16.4 billion lifeline from the International Monetary Fund, although that programme has now been suspended due to political rowing as the country gears up to a January presidential election.

Although it has not defaulted on any debt, Ukraine's state energy firm Naftogaz did have to restructure its entire foreign debt this year through the issue of a new $1.6 billion Eurobond after it failed to pay off a $500 million Eurobond at the end of September.

Naftogaz' finances have been ailing in recent years as it buys increasingly expensive Russian gas but is forced to keep domestic prices stable.

This year, however, it has paid its monthly bills on time and officials from both Ukraine and Russia have said a New Year gas row will be avoided.

The finance ministry said it had paid up $2.13 billion worth of foreign debt and 22.58 billion hryvnias in domestic debt.

Central bank officials have said it has enough reserves to meet its obligations to the end of the year despite the suspension of the IMF programme.

Valery Lytvytsky, the central bank's top adviser, told Reuters the bank had boosted its reserves by buying $718 million in December as the hryvnia currency slightly strengthened.

On Wednesday however, the central bank sold $15 million on the interbank market as the hryvnia began to slip on demand from importers and foreign companies settling their accounts. [ID:nLDE5BT1CZ]

Ukraine's finances have been stretched to the maximum -- budget revenues have slumped while spending continued on social benefits in the run up to the election and also to bail out some banks and stimulate economic growth.

But the authorities have found ways of funding expenditures through various means such as issuing high-yielding short-term domestic debt which the central bank buys with printed money.

The government has helped Naftogaz meet its gas bills in this way.

Some of this year's obligations such as state wages and pensions could be delayed by a few days into the next year, thus using funds from the 2010 budget, analysts have said.

The next Naftogaz payment to Russia's Gazprom -- estimated at just under $1 billion -- also falls due next year on Jan. 11.