March 2, 2018 / 11:47 AM / 4 months ago

Ukraine switches power plants to fuel oil, closes schools to save gas

KIEV (Reuters) - Ukraine has switched power plants to fuel oil from gas in an effort to make up for an emergency shortage after Russian company Gazprom (GAZP.MM) declined to resume gas supplies to the country, Energy Minister Ihor Nasalyk said on Friday.

FILE PHOTO: Ukrainian Energy Minister Ihor Nasalyk attends a parliament session in Kiev, Ukraine, April 14, 2016. REUTERS/Valentyn Ogirenko

The shortfall comes at a time of peak demand after a Europe-wide cold snap blanketed most of Ukraine with heavy snow and pushed temperatures well below freezing.

Nasalyk told parliament the lack of Russian supplies had created a deficit of up to 20 million cubic meters (mcm) of gas per day. Thermal power plants switching to fuel oil could save around 15 million mcm a day, he said.

The Energy Ministry also asked local authorities to suspend lessons at schools, universities and kindergartens until March 6.

The gas shortage equates to one tenth of Ukraine’s daily consumption of around 200 mcm.

On Thursday, Gazprom said it had returned a prepayment to Ukraine and would not restart gas supplies as an additional agreement to the existing arrangements had not yet been reached. Ukraine said it would seek compensation.

The row represents a new front in a long-running legal battle, a by-product of broader political tension following Russia’s annexation of Crimea in 2014 and support for separatists in eastern Ukraine.

It follows Wednesday’s international arbitration court order for Gazprom to pay $2.56 billion to Ukraine’s Naftogaz after weighing mutual claims and counter-claims related to gas supplies and transit.

The decision was welcomed in Ukraine as a major win for Naftogaz. Gazprom has said it will contest the ruling.

Reporting by Pavel Polityuk; Editing by Dale Hudson

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