Thu, 17 Oct 2019

Russia, Ukraine Move Ahead With EU Talks to Avert Supply Cut

Voice of America
20 Sep 2019, 07:05 GMT+10

This story originated in VOA's Ukrainian service. Some information is from Reuters.

Representatives of the European Union, Ukraine, and Russia have concluded a first day of talks in Brussels with "constructive" dialogue as they aim to extend Kyiv's gas transit contract with Russia, European Commissioner Maros Sefcovic said on Thursday.

Ukrainian energy authorities are worried Moscow could stop supplies through Ukraine when the current contract expires Jan. 1, possibly leaving some parts of the country without gas in winter.

"We addressed one by one all key areas, namely how EU energy rules have to be reflected in the legal frame in the future contract; what should be the appropriate duration of the contract; necessary volumes and flexibility; [and] how we should approach the traffic setting," Sefcovic said at a press conference immediately after the long-awaited talks.

According to Sefcovic, all parties agreed a future contract would be based on EU law, and that Ukraine's Naftogaz should be unbundled, which would create a new third-party company to handle the transit of gas through Ukraine.

He also said all parties agreed to resume ministerial-level talks before the end of October, and that lower level representatives from companies involved in the contract development will continue negotiating the details of Thursday's general agreement.

Earlier news reports had indicated that Ukrainian Energy Minister Oleksiy Orzhel had hoped to reach a deal with his Russian counterpart, Alexander Novak, at Thursday's meeting.

The talks follow a Sept. 10 decision by the top European Union court in Luxembourg to reimpose limits on gas flows via the Opal pipeline, a spur that connects Germany with the Nord Stream pipeline system operated by Russia's state-owned Gazprom.

Gazprom is pushing to complete the Nord Stream 2 pipeline project in 2020, after which it may no longer need Ukraine's pipelines for transit. Ukraine's loss of roughly $3 billion gas-transit fees - about 3% of national GDP - would be a substantial blow to the Ukrainian economy.

Moscow currently meets a third of Europe's gas needs - 14 EU countries receive more than 50% of their gas from Russia - much of which flows through Ukraine's Soviet-era pipelines.

Gazprom had been seeking full access to the Opal pipeline and received 80% of its available capacity after a 2016 European Commission ruling.

The Sept. 10 decision will reduce Gazprom's Nord Stream flows by 12.4 billion cubic meters a year, said PGNiG, Poland's state-run oil and gas company, the country's largest.

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