A number of recent statements by Ukraine's top officials indicate that Russia is now considered a preferred partner for the nation in running and upgrading the nation's massive gas transit network, in exchange for fixed transit volumes for Ukraine.
Prime Minister Mykola Azarov said that both Ukraine and Russia are
ready to upgrade Ukraine’s transit network, but not Europe. Europe
gets about 20 percent of its natural gas from Russia, though the vast
majority of that is transported through Ukraine’s gas transit system.
“We have approached a moment when we
will probably have an agreement,” Azarov told a high-level U.S.
delegation in Kyiv on March 19, according to Interfax Ukraine.
The renting and upgrade of Ukraine’s
gas transit system is a part of more complex negotiations with
Russia. Prices for Russian gas and fixed
transit volumes through Ukraine are also a part of it. Ukraine
has been unsuccessfully trying to reach a deal with Russia on these
issues since 2010.
But now Azarov says two parties are
ready for a deal – at least on operating
Ukraine’s aging transit system.
“We’re ready, Russia is ready, where
is the third party?” he said at a press conference on March 19. “We
have been talking about it for three years. How long should we be
waiting? You tell us to be careful with Russia, but give us some
offers! You give us no offers.”
Europe’s Commissioner for Energy
Gunther Oettinger, during a meeting with Ukraine’s Energy Minister
Eduard Stavytskiy on Feb. 21, said Europe
is ready to take part in negotiations any time, though.
Stavytskiy himself said at a press
briefing on March 18 that Ukraine continues “negotiating with all
interested parties, including the Russians as to the creation of a
consortium, and with Europeans on modernization of the GTS.”
But Vladimir Chizhov, Russia’s
representative in the European Union says Russia is only considering
a two-side consortium on operating the transit
system with Ukraine. He suggested that Europe can only have a
limited involvement in the process.
“If companies from the (EU)
want to invest, for example, in supply of equipment, we can
only welcome it,” Chizhov tolf ITAR-TASS news agency on March 18.
He also played down the state of
Ukraine’s gas transit network. “In reality, the GTS of Ukraine is
an extremely old infrastructure. In the post-Soviet period, almost
nothing was invested into it. Just individual pipes were replaced
when they burst. But the pumps, for example, are extremely outdated.
As a result, they are extremely uneconomic and use up a lot of gas,”
he said.
Ukraine is making it clear that
guaranteed transit volumes are a priority in choosing a
partner.
“We’re calculating what will most
advantageous primarily from the point of view of securing ourselves
enough volumes of transit and that we as a state fully control the
issue of our gas transport system because it’s an overly sensitive
and political issue,” Stavitskiy said on March 18.
Ukraine’s transit volumes have been
falling in recent years due to Gazprom’s effort to seek alternative
routes. Last year, the nation piped 84 billion cubic meters of gas
through its pipeline, down by 20 billion cubic meters from 2011,
according to the Energy Ministry data.
Chizhov also said that debates on
transit volumes get hot occasionally, for a number of reasons. He
said that at peak demand in winter Ukraine would have a hard time
filling its underground storage tanks
though spot markets. Ukraine can store 31 billion
cubic meters of gas, compared to 95 billion cubic meters in the rest
of Europe.
“Filling it through spot market won’t
work – only through Gazprom gas pipes,” he said.
The Ukrainian government expressed frustration over developments
with the South Stream natural gas pipeline, saying it was against its
national interests.
Ukrainian officials said they twice notified the European
Secretariat of the Energy Community of its frustration over plans for
a natural gas pipeline through Europe that avoids its territory, the
Interfax news agency reports.
“Despite the fact
that Ukraine has a well-functioning gas transportation system, which
provides continuous energy supplies to Europe amid the absence of
investment, individual member countries of the Energy Community have
got involved in the South Stream project,” a letter to Brussels
was quoted by the news service as stating.
Russian energy company Gazprom started
work on South Stream’s construction in December while
North Stream is in operation. Both transit networks bypass Ukraine,
which has had a number of price disputes with Russia, leading to
shutoffs in 2006 and 2009.
Kyiv Post editor Katya Gorchinskaya can be
reached at gorchinskaya@kyivpost.com.
