UPI Energy Watch

Russia, Europe, Ukraine reach gas deal

Ukraine signed an agreement with Russia and the European Union to monitor natural gas flow from Russia, a first step to easing Kiev-Moscow tension that resulted in a shutoff of gas that Europe needs during this cold winter.

Ukraine signed the protocol without insisting on an additional deal clearing Ukraine's name in the dispute, the Sofia News Agency reports. Russia on Jan. 1 decreased gas supplies to Ukraine, claiming Kiev owed gas payments and wouldn't agree to increased natural gas prices for 2009. Ukraine then diverted gas intended for Europe, prompting Russia to shut down supplies altogether.

Ukraine denies sidelining European gas.

Gazprom deputy chief Alexander Medvedev said the taps will turn on Tuesday, Platts reports. "If there are no obstacles or problems, gas supplies from Russia to Europe via Ukraine will restart at 0800 (Central European Time) tomorrow," he said.

The agreement was a victory for current EU leaders in the Czech government whose diplomatic skills were held in question, The Independent reports.

Czech Prime Minister Mirek Topolanek presided over talks between the chief executives of Gazprom and Ukraine's Naftogaz in Brussels. Bulgaria, Slovakia, Serbia and Bosnia are among the nations that will benefit from the talks.

Both sides promised to begin pumping gas to Europe, and a team of monitors from Ukraine, Russia and the European Union will be in place to check gas flows.

While this agreement was reached relatively easily, there is still no resolution between Russia and Ukraine over the gas debt.

Brazil aims to cut imports

The Brazilian government said it will temporarily shut down power plants that run on natural gas from Bolivia.

The goal is to reduce imports of Bolivian fuel, said Energy Minister Edison Lobao. State-owned Petrobras recently announced the decision to reduce its imports of gas from 31 million cubic meters per day in 2008 to about 19 million cubic meters per day this year, the Latin American Herald Tribune reports.

By cutting its imports, Lobao said Brazil hopes to save about $600 million just through April. An increase in rain recently has allowed Brazil to run its hydroelectric plants more often and to cut back on its use of gas- and other fuel-powered plants. In addition to saving money and fuel, the hydroelectric plants produce less greenhouse gas emissions.

Bolivia is concerned with Brazil's planned cuts as Brazil is the largest consumer of Bolivian natural gas and Petrobras historically has been the largest investor in Bolivian gas fields.

Algeria will increase gas to Europe

Algerian Energy and Mining Minister Chakib Khelil said he plans to increase the country's natural gas exports to European countries.

The increase depends on the conditions of each individual contract Algeria has with each European country, Chinese news agency Xinhua reports.

By increasing its exports, Algeria hopes to aid Europe as countries there are impacted by the Russian-Ukrainian gas dispute, Khelil says.

In addition, Dutch Minister of Economic Affairs Maria Van der Hoeven said Algeria's national oil and gas company Sonatrach has brought up the possibility of cooperating with Dutch companies on construction of a large gas storage facility that would help to increase natural gas transport to more Western European countries.

Algeria's current annual gas exports are about 62 billion cubic meters, and the country is planning to increase its exports to 85 billion cubic meters in 2012.

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Closing oil prices, Jan. 12, 3 p.m., London

Brent Crude oil: $44.56

West Texas Intermediate crude oil: $41.23

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