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Monday, 28 November 2016

Ukraine Celebrating Its One Year Freedom from Russian Natural Gas

Ukraine’s state oil and gas company NAK Naftogaz Ukrainy is celebrating one year without Russian natural gas. Naftogaz is celebrating its freedom from Russian natural gas – not a small feat considering Ukraine’s problematic history with Russia.

In a disclosure on its corporate website on Friday, Naftogaz said ”today is the first anniversary since Naftogaz stopped importing gas from Russia.” The company also offers a web link that clocks the number of days it has gone without importing Russian gas.

“It is an important milestone for independent Ukraine, as just three years ago gas was a major symbol of Ukraine’s political and economic dependence on its northern neighbor,” the release says. “This dependence, being maintained through manipulating volumes of supply and prices for Russian gas, forced Ukraine into political and economic concessions.”

The reliance on imported Russian gas was particularly painful as Russia started it annexation of then Ukraine-controlled Crimea in the spring of 2014. Naftogaz says, “Overcoming it was a major challenge for the company’s management in 2014-15.”

Naftogaz offered appreciation to those who helped it achieve its geopolitical milestone. “In less than two years of work and with the help of our Western partners, international financial institutions, coordinated efforts of the president, the government and the parliament, we have managed to achieve an important result: the attempts of the Russian leadership to use gas for political pressure on Ukraine are not efficient any more.”

“The gas dependence on Russia is eliminated. Naftogaz and the rest of Ukrainian importers now have access to alternative gas sources and can choose among dozens of suppliers,” the disclosure says.

However,  Ukraine remains a major route for Russian gas to EU members and ensures secure transmission. Russia has halted gas flows to Ukraine during winter twice in the past ten years due to various contract disputes, Bloomberg has reported. The second time, in 2009, lasted for three weeks and forced some eastern European countries to ration gas. About 40% of Russia’s sales to Europe flows through Ukraine.

Naftogaz adds that dependence from Russian gas imports had also helped the company turn a profit. In two years, it was transformed from one of the most unprofitable companies in Eastern Europe into the biggest contributor to Ukraine’s state budget, it says.

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