The European Union will host a fresh round of Trilateral Gas Talks between Russia and Ukraine on 19 September in Brussels with European Commission Vice President Maroš Šefčovič stressing that a solution needs to be found as it is important for the future gas trading operations of both countries.
“Pleased to announce that I will host the next round of Trilateral Gas Talks on 19 September. I am convinced that progress would send a strong positive signal to market as well as consumers ahead of the winter season,” Šefčovič wrote in a tweet.
A European Commission spokeswoman told New Europe on 13 September that the expectations for the Trilateral Gas Talks “are to follow-up on the discussion that took place in February.”
On 9 September, Šefčovič met Ukraine’s Energy Minister Alexey Orzhel to discuss the upcoming talks and the progress of much-needed energy sector reforms in Ukraine. Šefčovič and Russia’s Energy Minister Alexander Novak had agreed to hold trilateral talks this month during a telephone call on 6 September but the precise date was only announced after consultations with the Ukrainian side.
The contract for Russian gas transit across Ukraine expires on 31 December and the European Union wants to find a solution to avoid natural gas cutoffs.
Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies, told New Europe on 13 September she does not expect a breakthrough at the upcoming round of negotiations.
“I think it will be more about getting to know each other as the Ukrainian delegation will be different compared to the January 2019 round and will want to express their positions,” Yafimava said in reference to the new presidential administration of actor-turned-politician Volodymyr Zelensky, who defeated his incumbent rival Petro Poroshenko in a landslide electoral victory in April. Yafimava added that if any breakthrough were to be made it would be closer to the end of the year.
The Oxford energy expert believes that Russia’s gas monopoly Gazprom would want to book capacity on an annual basis whereas Ukraine’ National Joint Stock Company Naftogaz and the European Commission want it to conclude a 10-year contract.
Yafimava explained that Gazprom is not obliged under EU law – which Ukraine has committed to incorporate and implement – to book on 10-year basis, but could agree if certain concessions are made by Kyiv when it comes to direct purchases of Russian gas and/or arbitrations settlement and the European Commission’s commitment not to raise obstacles to the Nord Stream/OPAL and Nord Stream-2 pipelines.
“I think that, at best, Gazprom could hope to have one string of Turkish Stream and one string of Nord Stream-2 if Denmark gives an operational permit by January 2020, which means it would still be short of export capacity without Ukraine to continue to export to Europe at the 2019 level,” Yafimava said while adding that the recent OPAL judgment makes concluding the deal more urgent, but is likely to reduce Gazprom’s goodwill in the negotiations.
Meanwhile, many European countries, and Ukraine have injected large amounts of gas into Underground Gas Storage (UGS) facilities ahead of winter. Gazprom CEO Alexey Miller told a briefing with Russian President Vladimir Putin on 9 September the question of the transit contract is essential, and yet the top-priority question is whether Ukraine will buy Russian gas under a direct contract.
The new Ukrainian prime minister, Oleksiy Honcharuk, said in televised remarks, cited by Reuters on 11 September that the negotiations with Russia would be complex, but that Naftogaz has stored 19 billion cubic metres of gas to hold the country over through the winter.
“Ukraine had stored enough gas to minimise its vulnerability “to any attempts to put pressure on us during the negotiations. We feel confident,” Honcharuk said.
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