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Ukraine Closes Schools To Save Natural Gas

natgas

Amid freezing temperatures in a Europe-wide cold snap, Ukraine has switched its thermal power plants to fuel oil from natural gas and is closing schools until March 6 in an effort to save gas after Russia’s Gazprom declined to resume shipments to Ukraine.

Without the Gazprom gas deliveries that had to begin on March 1, Ukraine currently has a gas deficit of up to 20 million cubic meters per day, Ukrainian Energy Minister Ihor Nasalyk told Parliament on Friday. Switching thermal power plants to fuel oil could save the country some

15 million cubic meters of gas a day, Nasalyk said, adding that his ministry had also asked local authorities to close schools and universities until March 6.

The current gas shortage in Ukraine is equal to one-tenth of its daily consumption, according to Reuters calculations.

Just hours after an arbitration court had ruled in favor of Naftogaz in a long-running payment dispute between the Ukrainian state company and Gazprom, a fresh gas dispute flared up on Thursday after Naftogaz said that Gazprom had not stood by its commitment to resume gas supplies, forcing Ukraine to reduce gas usage amid Arctic temperatures as the ‘Beast from the East’ freezing weather front sweeps across Europe.

The new rift comes after years of bitter disputes between the gas companies of Russia and Ukraine, exacerbated by the 2014 Russian annexation of Crimea.

Related: U.S. Rig Count Inches Higher As Canadian Rig Count Slips

On Wednesday, the Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years and also for failing to pay the full transit fees for the gas it did pump in that direction.

Gazprom’s CEO Alexander Medvedev said the company had received payment from Naftogaz for gas to be pumped its way this month, but had returned it, because the two companies have yet to sign a supplement to their original contract reflecting the court’s ruling.

By Tsvetana Paraskova for Oilprice.com

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