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21st Sep 2019

EU-brokered gas talks bedevilled by ‘lack of trust’

  • South Stream - Oettinger is trying to keep other disputes out of the winter gas talks (Photo: gazprom.com)

Negotiators are struggling to secure EU winter gas supplies, with Ukraine saying chances of a deal are “pretty high”, but complaining of “lack of trust”.

EU-brokered talks between Russia and Ukraine’s energy ministers in Brussels broke off at 4am local time on Thursday (30 October) with no result.

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They are to resume on Thursday afternoon.

Going into the meeting on Wednesday, Germany’s EU energy commissioner, Gunther Oettinger, told German broadcaster ZDF the chance of success is “50 percent”.

Speaking to EUobserver on Thursday morning, a Ukranian diplomatic source said the chance is “pretty high”.

Many eastern EU states rely heavily on Russian gas which transits Ukraine.

But Russia stopped Ukraine supplies in June amid a price dispute which is currently mired in a Stockholm arbitration court.

The EU-brokered talks have broadly agreed the price which Ukraine is to pay for Russian supplies between now and March.

They have also broadly agreed how to settle Ukraine’s old unpaid bills and how to handle pre-payment for winter supplies, using EU and International Monetary Fund support.

But Russia is declining to enshrine the deal in a binding contract between its supplier Gazprom and Ukrainian distributor Naftogaz.

“The main sticking point is lack of trust … if we agree on supplies for the next five or six months, we need a guarantee that Russia will not later unilaterally change the price”, the Ukrainian source noted.

The contact was referring to Moscow’s history of broken promises: on international treaties over its annexation of Crimea; on the so-called Minsk Protocol on a ceasefire in east Ukraine; and on gas prices prior to Ukraine’s pro-Western revolution.

If there is no deal by the weekend, Oettinger, who has chaired the talks for the past five months, will, on 1 November, step aside to assume his new portfolio, on digital economy, in Jean-Claude Juncker’s European Commission.

He will be replaced by Slovakia’s Maros Sefcovic - Juncker’s man in charge of “energy union”.

The Ukrainian side met with Sefcovic on Wednesday just in case.

The veteran diplomat is well-placed to take over from Oettinger: he speaks fluent Russian; Slovakia depends more heavily than Germany on Ukraine gas transit; and Slovakia is helping Ukraine with “reverse flow” supplies.

The EU-brokered talks are taking place in a difficult context.

EU sources claim the words “Opal … South Stream … reverse flow … [and] sanctions” have not come up in the winter gas meetings.

But in a separate decision on Wednesday, the commission declined to let Gazprom pump more volumes via Opal - a pipeline which connects Nord Stream, a Russia-Germany pipeline, to the Czech Republic and beyond.

"Gazprom is initiating new talks with the newly elected line-up of the European Commission when it is ready”, Gazprom spokesman Sergei Kupriyanov said on the Opal issue.

Russia is also annoyed the commission has, on grounds of non-compliance with EU energy law, blocked construction of its South Stream pipeline.

South Stream is to pump gas via Bulgaria and Serbia to the heart of the EU, bypassing Ukraine.

Russia is equally annoyed that Poland and Slovakia are supplying gas - which originates partly from Russia itself and partly from Norway - via “reverse flow” pipelines to Ukraine.

Meanwhile, EU ambassadors on Tuesday opted to maintain economic sanctions on Russia over the Ukraine war.

An EU spokesperson told press: "there are currently no grounds for changing the EU restrictive measures”.

EU countries in a joint statement on Wednesday also criticised Russia for its decision to recognise 2 November elections to be held by pro-Russia separatists in east Ukraine.

"We deplore [Russian foreign] minister [Sergei] Lavrov's remarks about Russia's forthcoming recognition of the elections ‘on the territory of the proclaimed Lugansk and Donetsk People's Republics’,” the EU said.

“The holding of ‘presidential’ and ‘parliamentary’ elections, called by the self-appointed authorities, would run counter to the letter and the spirit of the Minsk Protocol and disrupt progress towards finding a sustainable political solution”.

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