London — * Accuses Gazprom of violating terms of transit contract

* Gazprom rejects risk of supply disruption due to pressure drop

* Russian flows dip in recent days on demand, price impact

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Russian natural gas flows to Europe via Ukraine have been put "at risk" by a sudden drop in pressure at a major entry point from Russia into the Ukrainian system, Ukraine's state-owned Naftogaz Ukrayiny said Tuesday.

In a statement, Naftogaz said there had been a "significant" drop in pressure in the Russian gas transmission system at the Sudzha gas metering station which "puts at risk the stability of gas supply in the European direction."

The drop in pressure comes as flows of Russian gas to Europe have dipped in recent days given lower demand and a less attractive oil-indexed price versus the European hubs.





Russian gas flows to Europe have fallen by as much as 10% in the past week to around 315 million cu m/d from 350 million cu m/d earlier in the month, mostly through the Ukrainian route, according to data from Platts Analytics' Eclipse Energy.

Gazprom would logically choose to cut transit via Ukraine first in a period of lower buyer-nominated demand -- both due to less favorable prices and warmer weather in Europe -- given that the Nord Stream and Yamal routes are cheaper.

The Russian oil-indexed gas price is still slightly cheaper than the TTF month-ahead price, but the two have been converging in recent weeks and the TTF price is set to fall well into the oil-indexed price range in the near future, according to Platts analysis.

A spokesman for Gazprom said Tuesday the company saw "no risk" of disruption to its transit supplies to Europe in terms of the allegations made in the Naftogaz statement.

Instead, it said, "the risk to supplies lies with low stocks of gas in Ukraine's underground storage facilities."

Gazprom has repeatedly raised concerns that Ukraine has not pumped enough gas into its storage facilities to meet demand through the end of the winter, putting at risk transit to Europe.

LOW PRESSURE

Naftogaz said the pressure at Sudzha had fallen to a "record low" of 49.7 atmosphere (atm) compared with the 60 atm stipulated in the gas transit contract between the two parties signed in 2009.

Naftogaz also said Gazprom was "consistently" exceeding the maximum fluctuation limit for daily gas withdrawal at exit points from the Ukrainian system, which is set at 4.5% for the Uzhhorod point, according to the transit contract.

"In some days of February, the fluctuations were twice higher than the limit," Naftogaz said.

"Furthermore, in certain periods of this month, the quality of Russian gas supplied to Ukraine's gas system for transit deviated from the contract conditions."

Despite this, Naftogaz said it was maintaining "secure gas supply to the EU."

"All orders of Russian gas importers are currently being fulfilled in full and on time," it said.

Naftogaz said it and the European Commission were concerned about the alleged failure by Gazprom to fulfill its contractual obligations.

"Explanations and remedy of the violations in performance are expected from Gazprom for the sake of secure gas supply to European consumers," it said.

Gazprom and Naftogaz are currently embroiled in a major arbitration dispute, with claims from both sides adding up to more than $70 billion overgas prices, supply obligations and transit terms from the 2009 contract.

--Stuart Elliott, stuart.elliott@spglobal.com

--Nadia Rodova, nadia.rodova@splgobal.com

--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com

[Adds analysis of Russian gas flow data, price]