Ukraine on Wednesday rejected a natural gas transit proposal by Russian energy giant Gazprom as an unacceptable and unprofitable proposition for Kiev.
Gazprom on Tuesday had said it could continue pumping reduced volumes of gas to western and central Europe through an existing Ukrainian trunk pipeline.
The suggestion came after German Chancellor Angela Merkel said a deal for the Nord Stream 2 project Gazprom has been pushing was impossible “without clarity about the Ukrainian transit role.”
Nord Stream 2 is a proposed expansion of an existing link that connects Russia directly to Germany via the Baltic Sea.
Ukraine has bitterly opposed the project because it fears it will undermine its traditional role as the main transit country for Russian gas exports to Europe.
Gazprom chief Alexei Miller said his company had never raised the prospect of stopping all Ukrainian transit and it could maintain volumes of 10 to 15 billion cubic metres per year.
But Ukrainian Energy Minister Igor Nasalyk said those amounts were too small to make Russian gas transit economically viable.
“Our country will not accept such volumes. For Ukraine, this is unprofitable,” Nasalyk was quoted as saying by the Interfax-Ukraine news agency.
Nasalyk said Ukraine would have to invest its own resources to keep Russian gas pumping at the levels offered by Gazprom.
He added that Russia needed to pump at least 40 billion cubic metres per year to make it “economically profitable” for Kiev.
The volumes mentioned by Gazprom are a fraction of those Russia hopes to supply to Germany and other parts of Europe by routes bypassing Ukraine once its existing transit contract with Kiev expires in 2019.
Ukrainian President, Petro Poroshenko, has urged Germany to abandon plans to build Nord Stream 2, saying it would amount to an “economic and energy blockade” of his crisis-torn country.
In 2017, 93.5 billion cubic metres of Russian gas transited Ukraine to the rest of Europe — about half of EU nations’ total purchases from Gazprom.
The United States has cautioned Germany against signing up Nord Stream 2, arguing that it would only increase Europe’s energy dependence on Russia.
More than a third of the gas consumed in the European Union is supplied by Gazprom.