Saturday

22nd Feb 2020

EU awaits gas after latest Russia-Ukraine deal

Russia and Ukraine promised to start pumping gas to the EU on Monday (19 January) after a breakthrough on prices over the weekend. But EU authorities remain wary as uncertainties cloud the deal.

Russian Prime Minister Vladimir Putin and Ukraine Prime Minister Yulia Tymoshenko emerged after 10-hour long talks in Moscow on Sunday with a new agreement on how much Ukraine will pay for Russian gas in future.

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  • Ms Tymoshenko (l) said EU-bound gas will begin to flow on Monday (Photo: yuliatymoshenko.com)

A fresh contract is to be signed by state-owned companies Gazprom and Naftogaz in the Russian capital on Monday, ending a bilateral dispute which saw Russia cut off EU supplies via Ukraine 12 days ago.

"Once all the documents on gas transit and gas purchases have been signed, gas transit to Europe will be fully restored," Ms Tymoshenko said on Russian TV.

If things go smoothly, the first volumes of gas should reach eastern European EU states by the middle of the week as Ukraine's vast transit system clunks back into operation.

But the Czech EU presidency and the European Commission pointed out that previous deals have swiftly unravelled.

"We have seen many false dawns in this dispute and the test in this case is whether or not gas flows to Europe's consumers. Until that point, the wait goes on for Europe," the commission said in a statement.

Czech industry minister Martin Riman and energy commissioner Andris Piebalgs also met with Russian President Dmitry Medvedev for separate gas talks in Moscow on Saturday.

The Medvedev event produced little of substance, beyond the Russian head of state's call for EU firms such as E.ON and Eni to purchase "technical gas" - used to power Ukraine's transit network - in future.

The Putin-Tymoshenko agreement is to see Ukraine pay European market rates for gas minus 20 percent in 2009 and full market rates from 2010 onward. Russia is to pay lower transit rates in 2009 and market rates from next year.

RosUkrEnergo - a Swiss-based intermediary owned by Gazprom and Ukrainian oligarchs, which skims at least €600 million a year off the gas trade - is to be frozen out.

Questions remain

Ukraine President Viktor Yushchenko did not immediately approve the new arrangements on Sunday, amid potential for further strife.

Figures linked to Ms Tymoshenko, who is to run against Mr Yushchenko in upcoming presidential elections, have accused his party of pocketing RosUkrEnergo money. One of the president's aides recently said Ms Tymoshenko has a secret deal with the Kremlin to put her in power.

Meanwhile, the actual price that Ukraine will pay for gas is uncertain. "European market rates" relate to confidential contracts between Gazprom and individual EU firms, with estimates on the prices varying from $300 (€225) to $500 per thousand cubic metres.

The Putin-Tymoshenko accord also failed to clear up the issue of Naftogaz' alleged €450 million debt to RosUkrEnergo for late payment of 2008 gas debts.

Political cost

Ukraine, which broke away from Russian control in the 2004 Orange Revolution, is in danger of paying a higher price for the gas dispute than Russia in terms of EU relations.

Industry commissioner Gunther Verheugen in an interview with German radio on Sunday said "the crisis, which we are living through, is not a recommendation [for Ukraine's EU accession hopes]," while advising Europe to press ahead with a new Baltic Sea gas pipe to Russia.

EU energy ministry officials will meet in Brussels on Monday in a "Gas Co-ordination Group" to assess how much economic damage the crisis has caused.

A 2,500-strong rally in Sofia on Sunday demanded Bulgaria restart two defunct nuclear reactors, while the Czech Republic began to pump gas stocks to energy-starved Slovakia in a gesture of solidarity.

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