EU's Sefcovic says Russia-Ukraine gas deal possible by end of 2019

 

Ukraine and Russia should be able to reach an agreement by the end of 2019 on the transportation of natural gas to the European Union, European Commission Vice President Maros Sefcovic said in Brussels on 21 January after chairing a meeting with Russian and Ukrainian officials.The talks were attended by Russian Energy Minister Aleksandr Novak, Ukrainian Foreign Minister Pavlo Klimkin, and executives from Ukrainian state energy company Naftogaz and Russian gas giant Gazprom.

The meeting have focused on Russian gas transit via Ukraine to Europe, the source of up to 3% of Ukrainian GDP. With Russia embroiled in conflict with Kiev over breakaway regions in Ukraine’s east and the European Union reliant on Russian gas to fuel its industries, the future of gas transit - seen by Kiev as a crucial guarantor of its independence from Moscow - is the subject of intricate diplomacy.

"If all goes well and if all actors work toward the same goal, I am confident that this process will be successfully completed by the end of this year," Sefcovic.

Russian President Vladimir Putin has said Moscow is ready to keep its transit of gas to Europe through Ukraine once the current deal with Kiev expires on 31 December, 2019 if supplies are economically viable.

Ukrainian state energy company Naftogaz accused Russia of delaying negotiations in order to get its Nord Stream 2 pipeline built first. Russia’s planned doubling of capacity on the Nord Stream pipeline across the Baltic Sea to Germany could help Moscow bypass exports via Ukraine. That would deny Kiev transit fees.

“Gazprom is delaying real talks in terms of transit in order to build Nord Stream 2,” Naftogaz Deputy Chief Executive Yuriy Vitrenko told Reuters before the talks on Monday. “Then they will say, ‘We are OK without any Ukrainian transits at all’.”

Russian gas giant Gazprom’s partners in the $11 billion Nord Stream 2 pipeline project include Germany’s Uniper and Wintershall and France’s Engie .

Moscow and Kiev have clashed frequently over energy. Talks are complicated by a lengthy legal dispute between Gazprom and Naftogaz that led to a Stockholm arbitration court ruling in February 2018 that each company must compensate the other. Naftogaz emerged the net winner of that ruling, gaining $2.56 billion from Gazprom. Gazprom is challenging the decision - a process that could take years.

Sefcovic said the Stockholm arbitration was the “elephant in the room”.

“For the Russians, it is a huge stumbling block,” Sefcovic said. “For them, it is difficult to negotiate a good contract for the long term when they are still fighting the legal claims.”

Washington has strongly opposed the planned pipeline to bring Russian gas directly to Western Europe, bypassing the existing networks running through Ukraine.

The commissioner said he had proposed a compromise for the sides to work on before the next trilateral meeting scheduled for May. The EU official also said he expected no problem with supplies of Russian gas via Ukraine to Europe this winter.

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