Ukraine moves closer on Russia sanctions

Political pressure: Kiev vowing sanctions against Russia

Ukraine's parliament has reportedly passed the first reading of a bill to impose sanctions on Russian companies and individuals, stoking fears among European gas suppliers that their supplies from Gazprom through Ukraine could be hit in the coming winter.

Ukrainian Prime Minister Arseny Yatseniuk said last week that the sanctions could be imposed against 172 citizens of Russia and other countries and against 65 Russian companies, including Gazprom, "for financing terrorism".

Kiev said that European energy companies may need to agree major contract revisions when buying Russian gas under the proposals, which are due for a second reading on Thursday, according to Reuters reports.

Ukraine’s gas grid Naftogaz said the sanctions could see a new setup where European companies buy the gas at the Russian border from Gazprom and transit it through Ukraine using a different operator.

Russia is Europe's biggest gas supplier, meeting almost a third of the region's demand, around half of which flows to European clients via Ukraine.

The EU’s energy commissioner Gunther Oettinger said that changing European gas contracts could not be done in the short term but would need to be discussed at a trilateral meeting of the European Commission, Ukraine and Russia envisaged for the Autumn.

Russian gas flows to Ukraine have been halted three times over the past decade, affecting supplies to the EU, by contract and pricing disputes between Moscow and Kiev.

Russia halted gas supplies destined for Ukrainian customers in June because of a row over pricing, but Russian gas transit through Ukraine to Europe has been unaffected so far.

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