Hungary’s gas pipeline operator has suspended delivery of gas to Ukraine “indefinitely”.
Ukraine has been receiving gas from Hungary, Poland and Slovakia since Russia cut off supplies to Ukraine in June in a dispute over unpaid bills.
Ukraine’s state-owned gas firm, Naftogaz, confirmed the stoppage. It called the move “unexpected and unexplained”.
The pipeline operator, FGSZ, said it cut deliveries to Ukraine to raise the flow of gas to Hungary.
Hungary’s gas pipeline operator has suspended delivery of gas to Ukraine indefinitely
With winter approaching fears are mounting that Ukraine will be unable to heat homes and power industry without Russian gas.
On September 26, Russian and Ukrainian energy ministers are meeting in Berlin for European Union brokered talks, aimed at heading off such a crisis.
Hungary said the stoppage late on Thursday was for technical reasons and because it expected Hungarian demand for gas imports to increase.
It comes three days after a meeting in Budapest between the head of Russian gas giant, Gazprom and Hungary’s PM Viktor Orban.
PM Viktor Orban has been critical of EU sanctions on Russia and has maintained a closer relationship with Moscow than his western European neighbors.
Earlier this year Gazprom and Russian President Vladimir Putin warned of consequences if EU member states went ahead with deliveries to Ukraine.
Russian President Vladimir Putin has signed a huge gas supply contract with China during his visit to the Asian country.
The deal between Russia’s Gazprom and China National Petroleum Corp (CNPC) has been 10 years in the making. No official price has been given but it estimated to be worth over $400 billion.
Russia has been keen to find an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine.
Shares in Gazprom rose 2% on the Russian market following the news.
Russian President Vladimir Putin has signed a huge gas supply contract with China during his visit to the Asian country (photo Reuters)
The agreement is expected to deliver some 38 billion cubic meters of natural gas a year eastward to China’s burgeoning economy, starting around 2018.
The main argument has been over price and China is thought to have been driving a hard bargain.
Over the last ten years it has found other gas suppliers. Turkmenistan is now China’s largest foreign gas supplier, and last year it started importing piped natural gas from Myanmar.
Another sticking point has been the construction of pipelines into China.
Currently there is one complete pipeline that runs across Russia’s Far East to the Chinese border, called “The Power of Siberia”. The pipeline was started in 2007, three years after Gazprom and CNPC signed their initial agreement in 2004.
Financing the $22-30 billion cost of sending it into China has been central to the latest discussions.
China is Russia’s largest single trading partner, with bilateral trade flows of $90 billion in 2013.
China and Russia aim to double the volume to $200 billion in 10 years.
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