Ukraine offers Europe a way to counter Russia’s gas monopoly plans. Chairman of the board of Naftohaz Ukrainy Andrii Koboliev called upon EU member states to unilaterally revise their contracts with Russia’s Gazprom in an interview with the Slovak newspaper Pravda.
Naftohaz’s boss believes that signing bilateral agreements between Gazprom and companies of individual EU member states, which has been the way it is done so far, needs to be replaced by a common EU gas market, which would involve Ukraine as well. It is in such a market, Koboliev maintains, that free trade in gas will be possible.
We publish below The Day’s experts’ opinions on how realistic is Naftohaz’s proposal, whether Europe will agree to it, and what other ways are there to beat Russia in this game.
Ivan NADIEIN, head of the NGO “Committee for Ukraine’s Energy Independence”:
“In fact, Ukraine has long been trying to move into a direct relationship with Europe on the gas supplies issue. Should it be done, we will be able to buy gas at the Russian border and supply it through our gas transmission system to European consumers, involving European investors in this business.
“As part of this design, Ukraine’s energy sector would be protected and fully integrated in the European energy system, not just the energy community. This would enable us to eliminate Russia as a major player in the European market.
“I think that such statements must have been made because their authors knew that at least some support for them was there. In principle, it is logical. Besides, this format of gas relations fully fits the third EU energy package, requiring the producer (in this case, Russia), the transit provider (Ukraine), and the consumer (Europe) to be separated.
“Undoubtedly, Gazprom will try to thwart this process. However, in principle, the consolidated approach of Europe and Ukraine is enough to solve this problem, for Gazprom depends on Europe and Ukraine, after all, as they are the largest consumers of Russian gas and, consequently, the largest sources of budget revenues. Therefore, in my opinion, Ukraine can end this battle in its favor. This will really be a victory in the energy market, negating the potential energy and political pressure from Russia on Ukraine and Europe, and Europe wants it to happen as well.”
Serhii YERMILOV, former Minister of Energy:
“I do not get how these agreements are to be revised unilaterally. After all, the EU contracts its gas for 25 to 30 years, and Gazprom will hardly agree to a revision.
“One can propose that European countries and their companies renegotiate their contracts with Gazprom so as to buy gas on the eastern border of Ukraine. For example, the German company RWE could buy gas from Gazprom on the border of Russia and sign transit agreements with the owner of the transmission system. It would be a realistic way to link our gas transport system to the European network with a single control center and build a reliable and transparent market for gas transit. We would then finally get market price of Russian gas at the border with Russia, because we all know that the cost of Russian gas is a political matter at the moment. We sometimes pay more for gas than Germany does, although transportation distance to that country is greater.
“Still, for all this to work, we need to create a gas exchange in Ukraine. It must have as its members all possible suppliers of gas to our domestic market – from the west and the east alike, as well as LNG suppliers from South African countries and the US. Meanwhile, our gas transmission company Ukrtranshaz should establish legal relationship with this exchange regarding the delivery of gas to consumers.
“Any exchange allows its participants to balance supply and demand through pricing. When demand increases, the price goes up, and vice versa. By the way, Russia opened a similar exchange for that country’s industrial companies in October. Independent suppliers offer gas which is then bought by industrial consumers. And you know what? Gas went down to 60 dollars over the first days of the exchange’s activity.
“We have all guidelines for this exchange fully laid out. It could have been launched this summer, we are just one Cabinet resolution from it. Ukraine’s president and prime minister know it. Also, we have ensured that this issue has been included in the Coalition Agreement. Had we resolved this issue this summer, we would not have the energy crisis now.
“It is strange, however, to see that neither the president nor the prime minister have lent their support to it. On the contrary, Cabinet resolutions monopolize the entire market through Naftohaz.”
