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EU says Ukrainian pipeline still key conduit for Russian gas

EU mediating new Gazprom-Naftogaz deal for 2020 on

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The European Union fully supports Ukraine as a stable and reliable transit route and will do its utmost to ensure that Ukraine remains an important transit route also after 2020, a EU energy spokeswoman told New Europe on 30 August.

“Ukraine has been a reliable transit country and the EU considers the Ukrainian transit route a strategic one for our energy security,” she said.

EU Commission Vice-President for the Energy Union Maroš Šefčovič met with his Russian and Ukrainian counterparts on 21 January in Brussels. “At the end of this meeting the Vice-President tabled a proposal for both parties to reflect upon,” the spokeswoman said, noting that it covers three main parameters of a future transit agreement, namely duration; volumes; and tariffs. But it also covers other important parameters, such as investment and maintenance of the gas system; legal requirements; and technical requirements.

The 10-year gas supply and transit agreement between Russian gas monopoly Gazprom and National Joint Stock Company Naftogaz of Ukraine signed in 2009 expires on 31 December.

The EU Commission has been mediating talks between Moscow and Kyiv in the hope that the two sides will be able to agree new arrangements covering transit from 2020, avoiding a repeat of the gas crisis in 2006 and 2009 when a disruption of transit volumes caused a significant impact on the wider Central and Eastern European region. However, the EU is better prepared to withstand a gas crisis as it has diversified its gas sources and boosted interconnections between member states.

“Vice-President Šefčovič invited the Ukrainian and Russian ministers for a meeting on the 16th of September to further discuss the proposal, we have not received the confirmation yet from our counterparts,” the EU spokeswoman told New Europe.

Meanwhile, German Chancellor Angela Merkel has reportedly reiterated Berlin’s demand that Ukraine will continue to serve as a transit country for gas to Europe after the opening of the Nord Stream-2 pipeline gas pipeline from Russia to Germany that nears completion.

Merkel agreed in a phone call with Russian President Vladimir Putin on 29 August on the need to speed up talks on future gas transit agreements, Reuters quoted the German government as saying. “They stressed the urgency of speeding up negotiations on future gas transit contracts,” a German government spokesman said in a statement.

Russia has been spearheading efforts to bypass Ukraine altogether and has almost competed the Nord Stream-2 pipeline, despite opposition from the US and some Central and Eastern European member states.

Gas transit via Ukraine is seen as a crucial guarantor of its independence and security, especially as Kyiv has remained dependent on the revenues for the Russian gas transit on the way to Europe, which are reportedly around $3 billion.

Meanwhile, Ukraine under the new government of President Volodymyr Zelensky is weaning itself off of Russian-supplied natural gas. Poland’s PGNiG said on 29 August the company has sold gas that is to be regasified from a spot cargo of US LNG to its Ukraine-based partner ERU, S&P Global Platts reported, noting that the cargo is expected to arrive in Poland’s Swinoujscie terminal at the beginning of November and the regasified volumes will be delivered to Ukraine via the Hermanowice interconnector point on the Ukrainian border before the end of 2019, PGNIG said.

The cargo has been bought for domestic Ukrainian use, ERU Trading Director Yaroslav Mudry said but he did not rule out re-exporting gas in the future. “We contracted this volume for the purpose of injecting and storing it for further delivery to consumers in the winter season,” Mudry said. “This way we contribute to the country’s energy security during the uncertain, and especially risky 2019-20 winter period,” he added.

Naftogaz’ Andrey Kobolev said that, as of 29 August, Ukraine’s natural gas reserves have exceeded 18 billion cubic metres, Reuters reported. Ukraine said it plans to stockpile at least 20 billion cubic metres for the 2019/20 heating season. Kobolev has said Ukraine needs to increase its gas reserves by 18% this year to cover its winter needs and to guarantee transit to European consumers.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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