Gas tanks are pictured at Austria's largest natural gas import and distribution station in Baumgarten May 2, 2014.
Gas tanks are pictured at Austria's largest natural gas import and distribution station in Baumgarten May 2, 2014. Austria rescued Gazprom's South Stream pipeline project last month so it can bring its own gas from the Black Sea, a source told Reuters, which will be the first time the Russian gas exporter has agreed a competitor's gas access to its pipelines. Picture taken May 2. To match story Reuters

Even as Russia is trying to corner Ukraine with the demand for a higher price for its gas, Ukraine chose to stump the former, by stitching a deal with Norway for gas supply. The deal between Norwegian utility Statoil and Naftogaz of Ukraine became functional from October 1 and Ukraine is getting 11 million cubic meters of gas per day. Still the volumes are not sufficient enough to meet Ukraine's demand.

Under the deal, deliveries of gas will be made in Slovakia, from where Ukraine will take care of its transportation. The reverse gas is allowed to enter the Ukrainian gas transport system through a mutually agreed mechanism of volume substitution.

The ZN.UA reported that the value of Norwegian gas to Naftogaz is about $340 per thousand cubic meters, lower than the last concessional price Russia offered to Ukraine at $385 per TCM. Again the reverse supplies may be Russian gas supplied by Gazprom to European customers under many long-term contracts.

Russian Gas

Russian stopped the gas supply to Ukraine in June because of political issues and differences in the matter of pricing of gas. Naftogaz opposed the higher price demanded by Russia for its gas after Russia revised the gas price from $268 to $485 per 1,000 cu m in April, Ukraine refused and Russia snapped the supply of gas. Meanwhile, Tass reported that Russia's Energy Ministry is wating for the date of gas talks between Russia and Ukraine under the EU's mediation. Energy Minister Alexander Novak stated that Russia is ready for a three-party meeting and is waiting for the call from European Energy Commissioner for the new round.

Pricing Tangle

Last month, the tripartite talks held in Berlin could not reach an agreement. Though Russia was flexible in the matter of pricing to Ukraine, it wanted Ukraine to settle the outstanding dues before resuming supply. Russia agreed to supply gas to Ukraine at $385 per 1,000 cubic metres. Russia also offered to supply 10 billion cu m of natural gas to Ukraine to tide over the high demand during winter. But Russia insists Ukraine's Naftogaz owes it $5.3 billion in dues and it must be settled soon. Russia is keen to restore gas supply to Ukraine, but under a new set of terms.