The crisis in Ukraine has put Europe's gas supplies at risk

Ukraine approves opening gas pipelines to EU firms

Ukraine's parliament approved a law on Thursday to allow gas transit facilities to be leased on a joint venture basis with participation from firms in the European Union or United States.

Ukraine will hold 51 per cent and foreign partners will be offered 49 per cent in the venture, which would manage both transit pipelines and underground gas storage facilities.

The law was backed by 228 deputies, only two votes more than the minimum necessary for the adoption of the bill.

Suffering a third cut-off of natural gas supplies from Russia in less than nine years, and with political relations in crisis, Ukraine is desperate to become less dependent on Russian gas, but at the same time to provide more reliable transit for the Russian gas that Europe needs.

The government has said the joint venture will bring in investment and remove the need for the South Stream pipeline, which Russia's Gazprom is building to take gas to southeastern Europe across the Black Sea, avoiding Ukraine.

Gazprom was not immediately available to comment.

If South Stream is built, it threatens to deprive Ukraine's badly strained budget of the transit fees that it currently receives from Russia for gas heading towards Europe.

The EU covers 30 per cent of its natural gas needs with imports from Russia, and about half of that comes via Ukraine, with some already having been diverted through the Nord Stream pipeline under the Baltic Sea.

Its supplies were briefly cut off in 2006 and 2009 when Ukraine argued with Russia about the price of its gas.

Ukrainian Prime Minister Arseny Yatseniuk said last week that Kiev could impose sanctions against Russian companies and individuals who support separatists in eastern Ukraine.

Gazprom, the only company which carries Russian gas to Europe through Ukraine, could also become a subject of Ukrainian sanctions. But Ukraine's state-run firm Naftogaz, which now controls the country's gas grid, said this week that sanctions against Russia would not necessarily target Gazprom.

"The adoption of the sanctions law will not lead automatically to sanctions against any entity, including Gazprom. The law simply establishes the legal right to implement them," Naftogaz said in a statement on Wednesday.

However, the Ukrainian company recommended European firms, which import Russian gas, consider revising gas contracts with Gazprom and buying Russian gas at the Ukrainian-Russian border.

European companies currently buy gas from Russia on the western border between the European Union and Ukraine.  

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