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“Chance for a temporary compromise”: how can the third round of negotiations on gas transit through Ukraine end


The third round of negotiations on the transit of Russian gas through the territory of Ukraine, in which representatives of Moscow, Kiev and the European Commission are starting, starts in Brussels. The parties have to agree on the terms of a new contract for the supply of fuel to Europe, since the current contract expires at the end of 2019. Kiev and Brussels insist on concluding a long-term agreement, which will include large volumes of pumping blue fuel, which is unprofitable for Moscow. In order to exert pressure on Gazprom in the run-up to negotiations, restrictions were imposed on Russian gas supplies through the OPAL European gas pipeline, experts say. However, Russia has its trump cards - first of all, it is the upcoming gas pipeline “Nord Stream - 2”.

On Thursday, September 19, in Brussels, another round of trilateral talks begins on the extension or revision of the contract for the transit of Russian gas through Ukraine. The consultations will be attended by official representatives of Moscow, Kiev and the European Commission. Moreover, on the eve it was reported that according to the existing plan, EC Deputy Chairman Marosh Shevchovich will first meet with the Ukrainian, and then with the Russian delegations.

The parties have little time left to reach agreement on the new terms of the contract, since the current contract will expire on December 31, 2019.

The first round of consultations took place in the summer of 2018, but the parties failed to come closer to a new agreement. Unsuccessfully ended and the next attempt to agree. As the Russian side stated then, an important condition for a compromise should be the settlement of a legal dispute between Gazprom and Naftogaz in the Stockholm International Arbitration Court.

  • Marosh Shefchovich
  • Reuters
  • © Radovan Stoklasa

Recall that the subject of litigation between state-owned companies in Russia and Ukraine was the tariffs for pumping Russian fuel - the Ukrainian side requires a review of transit prices in an upward direction. Also, the management of Naftogaz accuses the Russian side of not fulfilling the conditions for the volume of gas pumped.

Last year, the Stockholm arbitration court partially satisfied Kiev’s claims, obliging the Russian company to pay $ 4.673 billion. But since Gazprom had previously won a lawsuit against Naftogaz, some of the counterclaims were offset, and the Russian side remained “owed” to its Ukrainian partners $ 2 , 56 billion. However, this is not the final decision, because Gazprom filed an appeal.

The refusal of Kiev from claims may become one of the options for resolving the dispute and an important condition for the renegotiation of the contract for the transit of fuel through Ukraine, Gazprom said earlier. However, the Ukrainian side not only rejected this proposal, but also issued a series of ultimatums to the Russian counterparty.

In anticipation of the second round of transit consultations, Naftogaz filed a new lawsuit in the Stockholm arbitration in the amount of $ 12 billion. In Kiev, it was decided that the Russian side should “compensate” for Ukraine’s losses from the depreciation of the Ukrainian GTS as a result of the creation of alternative pipelines - “Nord Stream - 2 "and" Turkish stream ".

Naftogaz promises to abandon these requirements if a new contract for the transit of fuel through Ukraine is signed on the basis of “European standards”.

In the interpretation of the leadership of Naftogaz, this means the transfer of the “entry” point of Russian gas to the European market from the border of Ukraine and the EU to the Ukrainian-Russian border.

Under this model, Kiev will no longer be paid for fuel transit services by Gazprom, but by the European Union. This was previously reported by the executive director of Naftogaz Yuri Vitrenko.

Dates and volumes

It is worth noting that both the office of the new Ukrainian president Vladimir Zelensky, and the country's cabinet of ministers formed in August, for a long time shied away from defining their position on the future contract. On September 14, Ukrainian Prime Minister Aleksey Goncharuk announced that Kiev was ready for negotiations with Moscow on gas transit.

Literally on the eve of the consultations, the Minister of Energy of Ukraine Oleksiy Orzhel clarified the position of official Kiev: the head of the energy department said that the Ukrainian side would support the position of the European Commission in the negotiations.

“We have a position voiced by Mr. Shefchovich, European Commissioner, we support it. There were named certain volumes regarding transportation and certain dates. We fully support this position: 60 (billion cubic meters of gas per year. - RT ) plus 30 (billion cubic meters of gas per year. - RT ) and for ten years, ”UNIAN agency quotes Orzhel.

Thus, Kiev expects to conclude a long-term contract for the transit supply of at least 60 billion m³ of blue fuel annually.

  • Office of Naftogaz
  • © Danil Shamkin /

In addition, the minister announced the decision of the Cabinet to implement the long-discussed step - to create a separate company to manage the Ukrainian gas transportation system. Now the country's gas transmission network is controlled by a subsidiary of Ukrtransgaz, founded by Naftogaz. The new company will be transferred to the introduction of the Ministry of Finance, explained Orgel.

“Now Ukraine has all the elements to sign two agreements: an interconnector agreement (with Poland. - RT ) and a gas transportation agreement with the Russian side,” the minister added.

According to the head of the Ukrainian Ministry of Energy, Kiev has every opportunity for the newly created independent GTS operator to work "as required by the Third Energy Package and European legislation."

Recall, the Third Energy Package was adopted by the European Union in 2009. According to his standards, one company cannot use all the capacities of the gas pipeline. At least 50% of the volume must remain available to competing suppliers. In addition, one and the same company cannot simultaneously own a gas pipeline and produce fuel pumped through it.

According to Igor Yushkov, a leading expert at the National Energy Security Fund and a professor at the Financial University under the Government of Russia, Moscow would not have lost anything from switching to transit under European rules.

“The Ukrainian gas transportation system can pump up to 200 billion cubic meters of gas per year, half of this volume would be enough for Gazprom to fulfill its obligations to European consumers. But within the framework of European norms, transit tariffs would be more open, and Kiev could not frankly inflate the cost of services, ”the expert said in an interview with RT.

Earlier, the Third Energy Package norms were applied to the supply of Russian gas via the OPAL European gas pipeline following a complaint from the Polish energy company PGNiG. In 2018, by a decision of the Düsseldorf High Land Court, the interim measures for the Polish party's claim were canceled and the supply of Russian fuel was restored to its previous volumes. However, shortly before the third round of consultations on gas transit through the territory of Ukraine, again on the complaint of the Polish side, the EU court annulled the decision according to which Gazprom could use all OPAL capacities. According to experts, this decision was aimed at strengthening the position of Kiev and the European Commission in the upcoming negotiations with Moscow.

“Most likely, the European Commission will demand that Russia make maximum use of the Ukrainian GTS. This is precisely indicated by the recent decision on the OPAL gas pipeline, which came as a big surprise for many, ”Anna Kokoreva, senior analyst at Coface international insurance company, noted in a commentary on RT.

  • OPAL gas pipeline in Greifswald, Germany
  • © Nord Stream AG

One of the key issues on which the parties have to find a compromise is the timing of the future contract. Earlier, the head of the Russian Ministry of Energy Alexander Novak proposed to Kiev to extend the current gas transit contract under current conditions. However, both Ukraine and the European Commission insist on the conclusion of a new treaty for a period of at least ten years. According to Marosh Shefchovich, maintaining a long-term gas transit through Ukraine is “strategically important” for Europe’s energy security.

“The European Commission, in which the requirements completely coincide with the position of Kiev, stands for a long-term contract that will last at least ten years, while Gazprom stands in exactly the opposite position. If we need this contract, then no longer than a year or two, ”Alexander Pasechnik, head of the analytical department of the National Energy Security Fund, explained in a commentary to RT.

In addition, the parties have serious differences in the volumes of future transit. According to the expert, the Ukrainian side wants the level of Russian gas pumping to be at least 40 billion cubic meters of gas per year - this is the profitability point of the entire Ukrainian gas transportation system.

“These expectations do not coincide with the position of Gazprom, for which the“ ceiling ”of Ukrainian transit is 10-15 billion cubic meters per year,” Pasechnik emphasized.

Conflict Channel

According to experts, Moscow is negotiating with a strong position, since the laying of the Nord Stream 2 trans-Baltic gas pipeline is nearing completion. According to Gazprom on September 17, the construction of the highway was 80% completed.

“The speedy launch of Nord Stream-2 undoubtedly strengthens Moscow’s negotiations. The emergence of a new transit line will allow, if necessary, to redirect gas from the Ukrainian direction to the Baltic. And in Kiev they perfectly understand this, ”said Anna Kokoreva.

According to the expert, the parties have a chance to agree on a new contract before the end of the year, and Ukraine is primarily interested in finding a compromise.

“Do not forget that Russia has initiated claims to terminate transit through Ukraine to international courts, Moscow is preparing to completely stop transit in this direction. In the conflict line in which relations with Naftogaz are today, it is difficult to extend them. A new transit contract will be beneficial for Russia only under the condition of imputed transit payments, ”Kokoreva emphasized.

A similar point of view is shared by Igor Yushkov. According to the expert, one cannot count on a breakthrough in the current round of negotiations.

“The maximum that can be expected is some shifts in the positions of the parties and the relatively constructive tone of the negotiations, since some of the negotiators from the Ukrainian side have changed. In the future, there is a chance of a temporary compromise. For example, a short-term agreement will be signed, as Moscow requires, but transit volumes will be laid in it at the level of 60-70 billion cubic meters of gas, as Kiev would like, ”the expert summed up.

Source: russiart

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