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Ukrainian gas transit: Europe leaves issue unaddressed

October 06, 2015, 18:19 UTC+3 Alexandrova Lyudmila
© Valery Sharifulin/TASS

MOSCOW, October 6. /TASS/. Steady flow of Russian gas to Europe across Ukraine during the coming winter is in question again, as it happened on many occasions in the past. Kiev’s stance is largely to blame. The risk Ukraine may start siphoning off transit gas remains high, experts warn. Both Russia and Europe are pretty bored with Ukrainian transit problems, but Europeans nevertheless are in no hurry to welcome alternative solutions Moscow has been pressing for.

Although Russia, Ukraine and the European Union back on September 25 initialed a trilateral protocol on Russian gas supplies to Ukraine, the final agreement has not been effected to this day. Moscow and Brussels have already put signatures to the arrangement, but Ukraine looks in no hurry to do so. Nor has it begun to import gas, though the heating season starts on October 15.

Russia, the European Union and Ukraine agreed that Kiev would import no less than two billion cubic meters of gas in the fourth quarter of 2015 at a price calculated on the basis of the 2009 contract. The Russian government has approved of a $24.6 discount off each 1,000 cubic meters of Russian gas. In the last three months of this year Kiev is to purchase gas from Gazprom at about $227.4 per 1,000 cubic meters. To guarantee the purchases several international institutions, such as the European Bank for Reconstruction and Development and the European Investment Bank promised to give Ukraine $500 million.

Kiev is in no hurry to sign the deal probably because it is not quite happy with the amount of money the European Union has agreed to provide, the on-line portal Svobodnaya Pressa (Free Press) quotes the director of the Energy Development Fund, Sergey Pikin, as saying. "Kiev has already achieved the disbursement of $0.5 billion. But this is not a very big amount of money at all. It is just enough to purchase two billion cubic meters of gas, which will satisfy Ukraine’s demand only for short period of time. It should not be ruled out that Kiev may try to make tensions white-hot in order to make the Europeans provide much more."

"Europe has agreed to give Ukraine precisely the amount of money it will need to live through the winter. What will happen if the weather gets really cold is anyone’s guess," the leading research fellow at the Russian Institute of Strategic Studies, Vladimir Blinkov, has told TASS. He believes that Kiev’s reluctance to sign the papers right away is a means of pressure not so much for more money as for firmer guarantees the promised cash will be provided in the end. "They wish very firm guarantees from Europe they will have the money. Kiev would like to transform all arrangements into an inter-government agreement. If so, the agreement is to be concluded by the Russian and Ukrainian presidents and the EU leadership - the Council of Europe, and not the European Commission. This will take more time."

"If the winter is warm, the two billion cubic meters will be precisely the amount that will help them make ends meet. But if the weather is cold, problems may develop in late February or early March with both meeting the retail demand and with transit. Technologically the gas pipeline system can operate normally only at a certain pressure."

Blinkov recalls that Ukraine had asked Russia for a loan in payment for future gas transit, but Moscow refused.

"If Europe feels it’s too cold, Russia might deliver gas via a different route - Nord Stream - which is operating at 60% of its capacity. But in exchange Europe is to let Moscow use the Opal pipeline 100%, and not at today’s rate of 50%. Besides, there is the Yamal-Western Europe pipeline through Belarus. It might be used to a greater extent, too," Blinkov said.

Both Russia and Europe are very bored with the Ukrainian gas transit saga, Blinkov said. "But for the time being the Europeans hope that gas consumption will remain on the decline with the growing use of renewable power sources, and that the United States will continue to provide gas to Europe. Russia’s proposals for laying more gas pipelines with the ultimate aim of curtailing Ukrainian gas transit altogether after 2019 arouse no enthusiasm in Europe."

Blinkov said he was referring to two extra lines of Nord Stream and three lines of the Turkish Stream to Europe. "Negotiations are in progress, but the Europeans insist that Ukrainian transit should go on. The reason is clear: in that case the costs of supporting Ukraine will soar."

Laying more pipelines will require consent from the European Commission, which, as everybody knows, already upset Russia’s South Stream project, Blinkov recalled.

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