Wednesday

3rd Jun 2020

Ukraine government falls as fresh EU gas worries surface

The Ukrainian parliament has sacked its government due to the gas price row with Russia, as the European Commission tries to soothe fresh worries over EU gas supplies.

Two hundred and fifty out of 450 Ukrainian members voted against prime minister Yuri Yekhanourov's cabinet on Tuesday (10 January), Reuters and BBC report.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Mr Yekhanourov had tried to present the gas deal as a Ukrainian victory (Photo: Ukraine government)

President Viktor Yushchenko is seeking legal advice to keep the government in place until the March general elections.

He said "This decision will be shown to be unconstitutional" while visiting Kazakhstan.

Opposition parties brought the motion of no confidence after Kiev agreed to pay Russia $95 per 1,000 cubic metres instead of the previous $50 on 4 January.

Kiev also faced criticism for getting a price agreement until the end of June only, as well as involving unnamed and unaccountable Ukrainian businessmen in the deal.

Russia had originally pushed for price hikes to $230 per 1,000 cubic metres, with Ukraine foreign minister Boris Tarasyuk saying in December that the price push might be calculated to damage president Yushchenko's bloc.

The currrent crisis is the second to hit Ukraine since the Orange Revolution in November 2004, after president Yushchenko dismissed his first government in a corruption scandal in September last year.

EU gas worries resurface

The gas row sent shockwaves through the EU on 2 January, when supplies to member states such as Hungary dived hours after Russia turned off the gas to transit state Ukraine.

EU member states raised fresh gas supply concerns at an experts' meeting on Monday, with diplomats saying the June price deadline meant the same problems could resurface in the next few months.

A Ukrainian diplomat told EUobserver Russia will "no doubt" ask for sharp price hikes again, probably in mid May, but predicted Moscow would keep the gas flowing this time around.

"They would be stupid to do it a second time. They already dealt quite a blow to their reputations," he added.

The European Commission also tried to soothe nerves after seeing details of the Russia-Ukraine deal, saying that, under the terms of the contract, the new $95 per 1,000 cubic metres price will remain valid until 2007 if the two sides cannot agree on a new price.

But commission officials were unsure what might happen after 2007 in the worst case scenario, adding that the fall of the Ukraine government throws extra uncertainty into the situation.

Complexity of deal masks weaknesses

EU member states are worried that other aspects of the new Russia-Ukraine deal are also unsustainable.

The contract is a commercial agreement between state-owned Russian gas supplier Gazprom, Ukrainian-owned gas distributor Naftogaz and Swiss-registered Rosukrenergo, a joint venture co-owned by Gazprom and unnamed Ukrainian businessmen.

Under the deal, Gazprom sells Russian gas to Rosukrenergo at $230 per 1,000 cubic metres, Rosukrenergo mixes this with cheaper gas from Turkmenistan (bought for $45) and Uzbekistan ($35) and sells it to Ukraine at $95.

"How long will the Turkmenistan aspect of the deal survive?" an EU official asked. "It would not be unthinkable that Turkmenistan will develop ways to sell its own gas at a better price."

The Hungarian economics ministry told EUobserver that the Visegrad countries together with Austria, Croatia, Serbia and Slovenia are taking steps to reduce dependency on Russian gas following the recent supply crunch.

The group will hold talks at the end of January to present the European Commission with a "united front" to get "direct financing" for developing new pipelines via Turkey and the Adriatic coast.

But in the meantime, the EU's eagerness to keep Moscow sweet is visible in member states' weakly-worded resolution on a separate gas price row between Russia and Moldova.

Member states on Monday expressed "hope" for an "amicable solution" in a two line statement, after Moscow turned off Moldova's gas on 1 January asking Europe's poorest country to double gas payments to $240 per 1,000 cubic metres.

Vestager hits back at Lufthansa bailout criticism

Commission vice-president in charge of competition Margarethe Vestager argued that companies getting large capital injections from the state during the corona crisis still have to offset their competitive advantage.

German court questions bond-buying and EU legal regime

The German Constitutional court ordered the European Central Bank to explain its 2015 bond-buying scheme that helped eurozone stay afloat - otherwise the German Bundesbank will not be allowed to take part.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

News in Brief

  1. Trump threatens to use army to crush unrest in US
  2. Trump wants Russia back in G7-type group
  3. Iran: Fears of second wave as corona numbers rise again
  4. WHO: Overuse of antibiotics to strengthen bacterial resistance
  5. Orban calls EU Commission recovery plan 'absurd'
  6. ABBA's Björn new president of authors' rights federation
  7. Malta and Libya to create anti-migrant 'units'
  8. France reopening bars and parks next week

Stakeholders' Highlights

  1. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  2. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  3. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  4. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  5. UNESDACircularity works, let’s all give it a chance
  6. Nordic Council of MinistersNordic ministers call for post-corona synergies between economic recovery and green transition

Latest News

  1. Malta fiddles on migrants, as Libya burns
  2. Borrell: EU doesn't need to choose between US and China
  3. Post-Brexit and summer travel talks This WEEK
  4. State-level espionage on EU tagged as 'Very High Threat'
  5. Beethoven vs Virus: How his birthplace Bonn is coping
  6. EU's new migration pact must protect people on the move
  7. Spain takes 'giant step' on guaranteed minimum income
  8. Vestager hits back at Lufthansa bailout criticism

Join EUobserver

Support quality EU news

Join us