Miller said the scheme was enforced using technical manipulations at gas-measuring stations.

Reiterating Gazprom’s position, he said buying gas from Europe at spot prices will not be economically viable for Ukraine, which currently buys Russian gas at a fixed price of $430 per 1,000 cubic metres.

“There is no required gas volumes available there (in Europe) in principle, at least not the volumes which Ukraine needs,” Miller said. “Secondly, gas prices at all European spot platforms are higher than those on Gazprom’s long-term contracts.”

Spot prices have been on the rise in Europe due to unseasonably cold weather in the past few weeks. The March average UK spot gas price is around 85.6 pence a therm, some 10 pence below the Russian price.

Ukraine began importing a small volume of gas from Europe last year and wants to import up to 8 billion cubic metres of gas a year from central Europe to replace expensive Russian supplies.

Moscow has demanded concessions as a condition for reviewing the price agreement, such as Ukraine joining a Russia-led trade bloc or giving up control of its pipeline network.

Moscow has already made it clear it was unhappy with Ukraine reducing imports from Russia and sent Kiev a $7 billion bill in January for what it says are volumes of gas Ukraine was obliged to buy under the “take or pay” contract. (Additional reporting by Pavel Polityuk in Kiev; Editing by Catherine Evans)

Chairman Mikhail Afendikov, who was born in Donetsk, says Cub Energy brings together Albertan and Texan expertise and Western technology. Currently, it has nine gas wells in Transcarpathia and the Dnipro-Donets basin with up to 10 new wells planned this year in the 70,000 gross acres of underdeveloped land purchased this month lying adjacent to existing wells. The purchase of contagious land close to producing gas wells mitigates exploration risks enabling Cub Energy to draw upon existing infrastructure and in place Western technology.

Afendikov has high praise for Ukraine’s conditions for foreign investors saying Cub Energy has not experienced problems from local authorities while receiving encouragement from the central government. This is in contrast to earlier experience by Robert Bensh, who is a senior adviser to Cub Energy and Afendikov’s partner on day-to-day operations, with the Yushchenko administration. In 2008, after failing to resolve conflicts with oil and banking oligarch Igor Kolomoysky, who was then allied to Yushchenko, Bensh decided to close Cardinal Resources in Ukraine.

It is no coincidence that Ukraine’s energy independence is being spearheaded by Cub Energy, a city at the center of the large and active Ukrainian diaspora. It is also no coincidence that the majority of the Western companies that have won tenders in Ukraine’s energy sector are North Americans. The Yanukovych administration says that if Ukraine’s geopolitical importance grows in Washington’s eyes it will be given greater flexibility to pursue domestic policies and will be treated in the same manner as Russia.

Whatever the enigma, on-going steps toward Ukraine’s energy independence from Russia and the country again becoming a major European energy player are now on the cards for the first time since 1991. Cub Energy is one of the Western companies assisting in this strategic development.

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