EU to dodge gas crisis

Ukraine-Russia dispute ‘unlikely to affect Europe’


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An increasingly heated gas-price dispute that has ended a thaw in relations between Kiev and Moscow will not lead to a repeat of the previous gas crisis that affected the transit of natural gas to Europe, a Ukrainian expert told New Europe. “No. If we compare the situation with the 2006 and 2009 crisis, it’s not the same,” said Valeriy Chaly, Ukrainian former deputy foreign minister and now director-general of the Razumkov research centre in Kiev on 6 September; when asked if there would be a disruption to supplies. “A mechanism was created to pre-empt such a situation and at the same time it’s not in the interests of Ukraine or Russia to have gas supplies to Europe disrupted. Ukraine wants the position as a predictable transporter of gas resources and Russia definitely wants to trade with European countries,” he said. 
“At the same time, Ukraine signed some agreements with the European Union and I think we, Ukrainians, want to see Russia more predictable, more transparent and open, closer to European standards,” he added.
At their bilateral talks in Tajikistan at a regional summit on 5 September, Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych failed to resolve the dispute over the price of gas sold to Ukraine. Kiev has pushed for a reduction in the contracted price of Russian natural gas sold to Ukraine, citing falling demand for the fuel due to a slowing economy. Moscow has refused. Chaly acknowledged that, as a gas supplier, Russia would like to have maximum profits.  However, he noted that the situation has changed and Ukraine’s agreement with Russia on gas supplies puts the former Soviet Republic at a disadvantage in having to pay considerably more for Russian gas than other European countries like Germany. Asked if the EU was concerned that another gas crisis may affect supplies to Europe such as in 2006 and 2009, the European Commission stated that it had no comment.
Interfax quoted Medvedev as saying after the bilateral talks that he saw “nothing concrete” in Ukraine’s position on gas pricing, and that Ukraine was bound by contract to buy gas from Russia at previously-agreed volumes and prices. Chaly said that the basis for reaching a decision exists from the Ukrainian side but it does not seem Russia will be flexible because statements from Russian Prime Minister Vladimir Putin and Medvedev indicate that Russia expects new compromises from Ukraine. He said the so-called compromises reached last year had in fact changed the strategic and security interests of Ukraine. “I’m afraid it will all be part of the presidential campaign once again,” Chaly said, referring to the Russian elections next March. “For that reason, it will be political and no one can predict when or how the dispute will end.”
Putin has said that a review of the gas contract is possible if Ukraine agrees to merge its state oil and gas company, Naftogaz, with Russian gas monopoly, Gazprom. Medvedev has also urged Ukraine to join the Customs Union between Russia, Belarus and Kazakhstan.
On 6 September, Yanukovych said Ukraine is preparing to take Russia to court over the 2009 10-year agreement that ended a cut in gas supplies signed by ex-prime minister and opposition leader Yulia Tymoshenko, who is now on trial. “Russia’s position is categorically unacceptable and if it does not change then we will go to international arbitration,” Kommersant daily quoted Yanukovych as saying in an interview. Yanukovych said the basis of Ukraine-Russia gas relations should be the 2001 accords – not the 2009 deal.
Meanwhile, on 6 September Gazprom began filling a $10 billion subsea natural-gas pipeline from Russia to Germany. The Nord Stream gas pipeline bypasses Ukraine. “Today we start filling the first line with the so-called buffer gas, Nord Stream’s Deputy Communications Director Jens D. Müller told New Europe. “This is not a test, but part of the preparation for future transports. The fill-in will continue for some four weeks. Before the operation can start in October, the pipeline needs to be filled up with gas to a certain level. This will be the final step in commissioning of the first line, which means that Nord Stream Line 1 is ready to start transporting gas to Europe. After completion of all preparatory works on both ends of the pipeline in Russia and Germany, gas will start flowing through Nord Stream in October 2011,” Müller added.
Chaly noted, however, that Nord Stream is unlikely to weaken Ukraine’s hand in negotiating gas supply deals with Russia. Ukraine, which today carries 80% of Russian gas to the EU, wants to upgrade its Soviet-era pipelines and views suspiciously Russia-led pipelines such as Nord and South Stream. “Nord Stream will not impact dramatically on the situation of negotiations because at the same time the great amount of supplies remains on Belarus and Ukraine direction,” Chaly said. Asked if given the emergence of yet another crisis between Ukraine and Russia there are plans or discussions with Gazprom to cover possible disruptions of gas through Ukraine by alternatively using Nord Stream, Müller said there are no plans or discussions with Gazprom about potential disruptions of other facilities. “We will offer a new transport capacity aimed at transporting additional volumes to Europe in the long-term perspective. When our first line becomes operational, Gazprom will have three main gas supply routes to Europe: via Ukraine, via Belarus to Poland and then also Nord Stream,” Müller said. “Nord Stream will provide a very competitive solution: it is a modern, state-of-the-art high-quality pipeline with no intermediate compressor stations, and will provide the shortest route from Russia to Gazprom’s clients in the growing Northern European markets. Gazprom will determine the most efficient use of its various options: gas dispatching will be based on market demand.”
 
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