Wednesday

10th Aug 2022

Russia and Ukraine press ahead on gas link-up, leave out EU

  • A map at Gazprom's command centre in Moscow showing the company's assets in Europe (Photo: gazprom.ru)

On the eve of an EU-Ukraine summit, Russian firm Gazprom has announced that it will form a joint venture with Ukraine's Naftogaz that is to pointedly exclude an EU presence.

The state-owned Russian gas giant said in a statement on its website on Wednesday (17 November) that a meeting between Gazprom boss Alexei Miller and Ukraine energy minister Yury Boyko in Moscow on Wednesday (17 November): "Addressed various aspects of creating a joint venture between Gazprom and Naftogaz Ukrainy. The parties agreed to start evaluating the assets that could be contributed to the JV.

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Mr Miller added in a personal communique: "The creation of a joint venture is a necessary and absolutely logical step in the business of developing co-operation between the companies. Unlike the multilateral consortium, about which ineffective talks have gone on for many years, our joint venture will become a real instrument of conducting business."

The "multilateral consortium" involving the EU or EU companies was first mooted back in 2002. It never came to be. But the EU has continued to explore ways to get involved in Naftogaz ever since, with maladministration and alleged corruption in the firm seen as contributing to the series of EU gas transit crises in recent years.

The joint venture may see Gazprom give Naftogaz access to gas and oil fields in the Astrakhan and Yamal regions in return for part ownership of its pipeline network, a strategic asset for Ukraine.

In April, Mr Miller said that forming a joint venture would be the first step to a full-blown merger. If Gazprom, a vastly larger company, swallows Naftogaz, it would represent a betrayal of private assurances given by Ukrainian delegates to EU officials and is likely to lead to howls of protest from the Ukrainian opposition about loss of sovereignty to Russia.

The Gazprom announcement comes three days ahead of an EU-Ukraine summit in Brussels on 22 November.

The summit is meant to inject a feel good factor back into bilateral relations by the EU offering Ukraine an Action Plan on future visa free travel, a long-sought for goal for Kiev. Relations have soured due to the slow pace of progress on an EU-Ukraine Association Agreement and "deep" free trade agreement, and following reports of the Yanukovych administration's crackdown on NGOs, media and the opposition.

Swedish foreign minister Carl Bildt and his Polish counterpart Radek Sikorski, the two main architects of a recent EU policy toward its post-Soviet neighbours, the Eastern Partnership, visited Kiev on Wednesday on Mr Yanukovych's invitation.

"I think that after some gestation period, [under the Hungarian and then Polish presidencies] you are about to see a greater wheeling out of the flagship initiatives that make up the Eastern Partnership," Mr Sikorski told Reuters in an interview.

"[It] can practically help those countries to make themselves compatible with the EU, while the climate in favor of ambitious enlargement is not yet right. So it can help those countries prepare for the moment when we have overcome our economic difficulties and become more generous again,"

Asked whether the union trusts Mr Yanukovych when he says his top priority is EU integration, a senior EU diplomatic source said: "He still has to prove himself, only time will tell."

The contact added that "there is a good atmosphere on visas" in Brussels after the bloc recently agreed to lift travel requirements on Albania and Bosnia in time for Christmas.

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