Ukraine signs first Transbalkan gas deal with Azerbaijan's SOCAR

KYIV (Reuters) -Ukraine's state-owned oil and gas major Naftogaz has signed its first deal with Azerbaijan's SOCAR to import a small volume of Azeri-origin natural gas via the Transbalkan route, it said on Monday.

"For the first time, a test shipment of gas is being delivered through the Transbalkan route along the Bulgaria–Romania–Ukraine corridor," Naftogaz said in a statement on its website.

The Ukrainian company said the agreement was for a small volume of gas, and did not specify a timeline.

"This is a small volume but strategically important step that paves the way for long-term cooperation," Naftogaz CEO Serhiy Koretskyi was quoted saying in the statement.

Ukraine said in May that its energy regulator had approved a gas import mechanism that will avoid the high transit fees for gas supplied through the Transbalkan pipeline from Greece to Ukraine.

Ukraine has faced a serious gas shortage since a series of devastating Russian missile strikes this year, which significantly reduced domestic gas production.

Ukraine imports gas via Slovakia and Hungary, but has not used the southern route because of its higher transit tariffs, as gas from LNG terminals in Greece also passes through Bulgaria, Romania and Moldova.

"This is another clear example of successful diversification of energy sources — a key factor in ensuring reliable preparations for the heating season and its smooth running," new Ukrainian energy minister Svitlana Grynchuk said in a statement.

She added that the route is "extremely important" for Ukraine, as it provides access to liquefied gas at Greek and Turkish LNG terminals, Azerbaijani and Romanian pipeline gas as well as to potentially Bulgarian offshore gas.

A Ukrainian industry source told Reuters that Ukraine is carefully tracking the origin of gas to prevent Russian fuel from being delivered.

"This is Azerbaijani gas, it is controlled. We will continue to develop (the cooperation)," the source said.

Previously, Ukrainian energy experts expressed concern that Russian gas could be present in gas supplies from the south.

Ukrainian analysis firm ExPro earlier this month said that Ukraine has more than 9 billion cubic metres (bcm) of gas in its underground storage facilities as of July 17, while it plans to accumulate around 13 bcm for the 2025/26 winter heating season.

It noted that the reserves were 13.9% down compared with the same period last year and were at their lowest in the last 12 years.

(Reporting by Anna Pruchnicka and Pavel Polityuk; Writing by Max Hunder; Editing by Toby Chopra and David Holmes)