Russia, Ukraine Map Out Future Transit Talks: EU
Summing up a July 17 trilateral meeting in Berlin about future Russian gas transit flows across Ukraine, European Commission vice-president Maros Sefcovic said that further meetings will be held and that a "positive agenda" for them had been mapped out.
The July 17 trilateral talks in Berlin were attended by Russian energy minister Alexander Novak and Ukraine's foreign minister Pavlo Klimkin, alongside Sefcovic himself as mediator, plus Gazprom CEO Alexey Miller and his opposite number at Naftogaz Andrey Kobolev. Sefcovic characterised the talks as “very open” and said all participants were “forward-looking”. The process ahead would be “complex and difficult” but he stressed that the trilateral format was "the best way forward for all parties."
An agreement was reached on separating “old from new issues”, said Sefcovic, and the focus will be on “how to make sure that we have a good new transit contract post-2019.”
But a source at the Ukrainian company told NGW July 17 that the company would have to "think twice before we offer our transmission services to Russians. The idea behind that is to maintain transmission and at the same time encourage western companies to buy Russian gas at our eastern border. The EU transit fees are annoying for Russians, but absolutely acceptable for any market-oriented company. If we win here, further steps will come easier because of one crucial reason: there will be no more Russian gas transit via Ukraine but gas transmission under the third energy package rules and practices."
In order to comply with European rules, Naftogaz will have to unbundle its gas transmission from its gas trade and supply business, a process which has not yet started.
Sefcovic said experts from Russia, Ukraine and the EU would meet in mid-September to tackle such issues. By experts, it’s understood this includes officials from Gazprom and Naftogaz. He also proposed that both ministers should meet again at a political level in October.
Experts would address how the transposition of EU law in Ukraine would impact future transit flows and the setting of future tariffs, he said. Talks would also look at how a future unbundled Ukrainian gas transmission operator would work, and what the EU’s future needs are for Russian gas.
After the two proposed autumn meetings, Sefcovic suggests that future meetings be held at a six- to eight-week interval thereafter, implying that they might alternate between ‘expert’ and ‘political’ meetings. He did not say where the mid-September and October meetings would be held, but suggested Brussels as a venue where many EU experts are on hand.
He said the July 17 talks were held in Berlin at the invitation of German economy and energy minister Peter Altmaier and with the support of German chancellor Angela Merkel. Both German politicians had previously tried to mediate between Russia and Ukraine; neither however delivered any tangible outcome. Ukraine is concerned that, if Gazprom develops the Nord Stream 2 pipeline (NS2), it will shift more transit gas to the EU market over to that route – which by then will reach 110bn m³/yr capacity, including the existing Nord Stream pipe – leaving Ukraine's transit system under-used. Gazprom's TurkStream line is also scheduled to carry 15.75bn m³/yr of gas through Turkey into Bulgaria and Romania by the end of the decade.
Ukraine has approached western partners about co-investing in its gas transmission system. But hopes of attracting such partners will vanish, unless a transit deal satisfactory to Kiev and Moscow is reached.