The trilateral (Ukraine-European Union-Russia) negotiations, to be held on November 22 in the Belgian capital, are just a week and a half away. Ukraine’s Prime Minister Mykola Azarov described their content in very clear-cut terms: “There will be a meeting of Europe’s energy business representatives in Brussels. This will be the first trilateral meeting which, in my view, must say at what pace, by what means and resources, and with the participation of what sides our gas transportation system will be modernized.”
Before, Russia not only refrained from participating in the negotiations but even sabotaged them because it wanted to establish absolute control over our gas transportation system (GTS). The Europeans did not show too much interest either: they waited for Russia to make a choice between a loss-making decision to build the South Stream pipeline and a less costly option to modernize the Ukrainian GTS. Europe knows only too well that Russia may easily sacrifice economic for political dividends.
Roman Shpek, a Ukrainian EU expert, thinks that Russia’s acceptance of a trilateral format is a good sign. “First of all, the meeting should take place and show that all want to work in a trilateral, not bilateral, format,” he says. What also left a good impression is the Ukrainian premier’s recent statement. “It means losses for us. It is an extremely unfavorable option for us. We invited the EU and Russia to discuss the reconstruction of our southern network of gas pipelines and, as a result, invest 20 times less funds in the mo-dernization of our southern gas pipelines and reach the same point — Burgas in Bulgaria — with the same quantity of gas now being planned to be delivered through the South Stream system,” Azarov said.
However, the US Federal Reserve System (FRS) switches on the dollar printing machine as an economic sti-mulator, this will immediately boost oil prices in the world. Naturally, this does not please Ukraine at all. What poses the main threat to us is the notorious Gazprom formula. It is easy to predict that, in line with the current oil-related trends, the latter will also raise the gas price for Ukraine.
This is a surprise even for the OPEC. The OPEC Secretary General Andallah el-Badri told Azarov in Vienna: “There is no longer a direct relationship today between oil and gas prices because the United States has begun exploiting the powerful deposits of shale gas.” And it is no wonder that Ukraine — a major importer of raw hydrocarbons — wants to become an observer in this organization. Azarov said the other day that he had made this proposal to Abdallah el-Badri. “It is extremely important for us to know the policy of major oil producers, to know the main parameters and forecasts. I therefore think it advisable for our country to be an OPEC observer,” he told journalists. He also noted that Ukraine is interested in reviving its relations with the OPEC in connection with an increased transit of oil across the territory of our country. According to Ukraine’s head of go-vernment, Venezuelan oil will begin to be supplied to Belarus via Ukraine this year (they plan to test the upstream pumping through the Odesa-Brody pipeline on November 17), and negotiations are underway to transport oil from Azerbaijan.
To tell the truth, experts are not very optimistic about the success of the premier’s cause. “The gas price for Ukraine may vary between 260 and 275 dollars per thousand cubic meters next year (compared to 252 dollars in the fourth quarter of this year). The next government of Ukraine (I am sure the president will have every opportunity after 2010 to seriously reform the government) will have to seriously tackle the problem of increasing energy efficiency, also by way of boosting domestic prices for all consumers, and to change its energy strategy,” Narbut, an expert, says. He is correct. Is it worthwhile to beseech Russia to revise their formula if our country is not in fact tapping its reserves of energy efficiency? Suffice it to say that the company Zorg Biogas Ukraine is going to build biogas stations in the South African Republic and Greece, while it shuns doing so in its own country. No wonder at all. The national law on the “green tariff” does not apply to the company’s high-tech equipment and animal husbandry wastes.
