Gas transit: Europe puts Ukraine under Russia

Газовый транзит: Европа укладывает Украину под Россию

On 30 October, came the long-awaited for some and extremely sad for the other news: Denmark has finally given permission to lay in his water pipeline. It was the last obstacle to the construction of “Nord stream – 2”.

Clearly, in Kiev, this news has caused deep disappointment. Even Ukrainian experts recognized that the position of Ukraine on gas negotiations has dramatically weakened (however, most of them, especially the “Patriotic” orientation, and did not say anything), and Vladimir Zelensky was only able to squeeze out that “this strengthens Russia and weakens Europe”. But just the day before the event, after another round of trilateral consultations in Brussels, it would seem that in Kiev there is reason for optimism.

“About the future relations we have a common position with the European Commission: a new contract must be long term and in large volume. It needs to be concluded with a new operator of the Ukrainian GTS, which from 1 January 2020 will be derived from the group Naftogaz” — said their results in “Naftogaz”.

And the Vice-President of the European Commission Maros Sefcovic and all reported them almost a failure: “My message at today’s talks — time is running out. At a critical time. When you need to decide. This is what I appealed during today’s talks to both sides. I have to declare that I am disappointed with the results of today’s meeting. Our goal for the talks was, despite the political will (probably refers to political differences. — Ed.) — to find the positive side in the interaction”.

Apparently disappointed the European official that is the firm position of Russia, as the Russian leader said, “we know the estimation of some officials of the European Union, of the European Commission about how these negotiations have gone. Our assessments diverge. We believe that they were constructive, with all parties, including our Ukrainian partners.”

Indeed, the Russian and Ukrainian Ministers in his comments on the sidelines of the meeting, was more optimistic, although publicly stated the discrepancies were obvious. Russia is ready to consider two options: the work “European”, with the distribution of auctions “free” capacity, or the conclusion of a short-term contract for a period of about a year while running at full capacity “flow”.

A separate item was the fact that Russia insists on the “batch” character of the new agreements, namely that they involved the refusal of “Naftogaz” claims to “Gazprom”, which addressed the Stockholm arbitration.

This was confirmed by Vladimir Putin: “the Question only in the sphere of arbitration of disputes of the nature, in our opinion, is absolutely absurd, for example, when there’s seven billion dollars trying to show through the Ukrainian courts to “Gazprom” to pay for the fact that it occupies a exclusive place on the transit market of Ukraine. While “Gazprom” did not tranzitiruet, delivering the Ukrainian company. That’s just absurd.

The same thing happens in Stockholm. Should this absurd to get rid of, to nullify all claims on both sides. We are ready for constructive work and by pumping gas through Ukraine, and gas supplies to Ukraine, and with a significant reduction in the price unlike that of the consumers of Russian gas in Ukraine get the gas today.”

In this context, the words of the Ukrainian Minister of energy Alexei Ojala that “the Russian side asked the questions of the jurisdiction of tribunals”, you need to understand that Moscow would not want to disputes under the new contract were the responsibility of Stockholm, which has already demonstrated its “objectivity”.

Against this background, Denmark, whose sabotage, as everyone knows, was due to “solidarity” with Ukraine, it would seem, ought, on the contrary, to delay the issuance of a permit to continue and certainly not to “time” his extradition to the time immediately after the talks demonstrated the intransigence of Russia.

It is considered that the “obstinacy” of Denmark was due to the “wishes” of Washington, openly trying to derail this project. But it should be noted that a small Kingdom in the great geopolitical game trying to play, in addition to the political and economic sense integrated into the European space. Critically important for his relationship with Germany, a great power and the only country, which is Denmark’s land border.

And so hard to resist such a fundamentally important for the main foreign partner of the project to her, it seems, was not with his hands (note that in may in Denmark there was a change of government, ie, we see a consistent rate, regardless of those who are directly in power).

Where was logical to expect problems from Sweden, the water which passes the “lion’s share” of the offshore section of Nord stream. The birthplace of Charles XII still retains big ambitions for its role in Eastern Europe, where betting on the most Russophobic regimes such as Ukrainian, actively supporting them and even acting as a sort of a lawyer (the decision of the Stockholm arbitration on the gas dispute between Russia and Ukraine is a clear example). But with Sweden, no problems arose, all the necessary permissions she gave at the time.

Therefore, there is a feeling that the key structures and “players” in the EU, including Germany, Denmark was initially assigned the role of “bad guy”, which will slow down the project until then while Russia will not accept certain conditions. Came for her, Denmark is the fact that through it the water passes a small section of the pipeline, which asociatii without problems will pass in a few weeks when these conditions will be accepted. But the delay in the issuance of a permit by Sweden could do significantly hinder the implementation of the project.

The condition is also clear — the preservation of Russian gas transit through Ukraine and gas supply of the Ukraine. It, in particular, repeatedly voiced by Angela Merkel. The game of Germany and the EU lay in the fact that, on the one hand, using under construction “Gazprom” (with the participation of Western investors) of the pipeline to safely protect yourself from any “transit risks” associated with Ukraine, the other — “to compel” Russia to continue to supply gas to Ukraine and to support its weak economy “transit” money.

And for anybody not a secret Russian origin “the Hungarian” and “Slovak” gas, which is now fueling the Ukraine, that the Western border of Ukraine the gas crosses (in both directions) is only virtual. So, will not transit (in quotes and without) — the Ukrainian economy will remain without gas.

This difference of positions long before the deadline (1 January 2020, when the term of validity of the contract on gas transit through Ukraine) has raised fears that the case could reach a full-fledged “gas war”, as in 2006 and 2009 And we can say that the Russian leadership, following the principle of “if you want peace, prepare for war”, previously adopted measures, in order to be as strong, no weak points, negotiating position when it comes to “critical time”.

This “weak spot” was in Russia in Kaliningrad region (if Lithuania out of solidarity with Ukraine will block gas transit to Kaliningrad). But in January in Kaliningrad was launched in the complex, allowing to supply gas to the Kaliningrad region by sea tankers-metanopoli. At the opening ceremony Vladimir Putin has explicitly recognized that the construction of the facility worth over $ 1 billion. not due to economic expediency (to supply gas through pipes through Lithuania a lot cheaper), and the need to eliminate transit risks.

And the closer January 1, there was significant progress, and dates when they appeared clearly “was correlated” with the time needed to finish all the work “under the tree”, by January 1, well, maybe with a small noncritical delay.

October 18 in the agenda of Parliament suddenly introduced bill No. 2239-1 prescribing unbundling of Naftogaz and the establishment of an independent transmission system operator (October 31, the day after the decision of the Danish authorities, it was adopted by the Council on second and final reading). Earlier that day, Prime Minister Alexey Goncharuk has assembled a faction of the “servant of the people” and “raised voices” urged her members to urgently adopt the bill, which is agreed by the relevant Committee. Formal occasion for haste there — next week will be another round of negotiations with Russia on transit. And the supposedly “independent operator GTS” is the trump card of the Ukrainian delegation.

What was the need to create new structures, which concentrate in their hands the management of the GTS, explained earlier, a source in the European energy sector: “Kiev has assumed obligations as a member of the European energy community to implement in its legislation by 1 January 2020, European energy policies, including the conduct of auctions for the reservation of transit capacity.

Thus, even in the absence of the contract, the operator of the Ukrainian gas transportation system will be required to auction their transit facilities, which “Gazprom” will be able to redeem for the implementation of short and medium term supply. And even the lack of a contract will not result in the termination of gas transit to the EU.”

Obviously this is not something that is expected in Kiev, where he planned “no time” by January 1, to adopt the amendments to the legislation implementing its obligations to the EU. But, apparently, the position of the European partners who do not wish to stay without Russian gas, has forced the Ukrainian leadership to hurry. Time due to the fact that it takes time to check Ukrainian law in compliance with European legislation and undertaken by the Kiev commitments (whatever they know how to twist, well known), to carry out other bureaucratic procedures.

The latest attempt to soften the position of Russia was taken on 28 October in Brussels, and when it failed, it’s time to start laying the “Nord stream” through Danish waters. The moment when Denmark gave, is indicative of the fact that this is a deadline from the point of view of completion of the pipeline in time. Earlier, the head of “Gazprom” Alexei Miller predicted that the construction of the pipeline through Danish waters will require approximately five weeks after obtaining the permission of the authorities of the country. Since the Danish authorities have approved the shortest of the two proposed Nord Stream 2 routes to the South-East of the island of Bornholm, the end of the construction, as planned, is expected by the end of the year.

This moment is indicative of the fact that the southern route passes through territorial waters of Denmark, where it is “in your law” in its sovereign waters to prohibit the laying of the pipeline, and without explanation. Therefore, the operator of the project applied for and on the Northern route — it passes only through the economic territory of Denmark, where it has the right only to demand compliance with environmental standards. And as you can see, the Danes did not “mean” in the end.

At the same time, the operator enough time to complete the task in time, but without the stock at the time. Since, as explained by the representative of the Danish energy Agency Round Falbe-Hansen, a positive decision can be challenged in the next four weeks, and like “under the tree” (to appeal against the decision may only one side, i.e. 2 Nord Stream AG, which, of course, do not have to wait). “I think the timing of the construction of “Nord stream – 2″ special problems will not be. We were ready for more worst-case. We will build it exactly until 31 December or until January 10, these terms are no longer fundamental,” said TASS analyst “Finns” Alexey Kalachev.

Nevertheless, it is clear that by January 1 to start “threads” (including “Turkish”) on design capacity will not work, and the development of ground infrastructure to deliver the supply of gas for all consumers is scheduled for the 2020-2021 years. But this only means that Kiev will have to transport gas for “European rules”.

The acceptance of the offer “Gazprom” to extend the current contract year is extremely unlikely, as will certainly be interpreted Ukrainian mega-patriots as “zrada” what the current government is very afraid of the (transition to the “European rules” — is another matter, there is nothing to complain about).

The question remains about the Ukrainian claims, but it seems doable if not from the beginning of 2020, in a year or two, when the flows are running at full capacity. After all, when the European scheme of transit through the auction of available capacity (a “proprietary” Ukraine will not be), then Russia will have no legally binding reason to put Hungary and Slovakia more gas than is necessary for their own needs (and Ukraine — the rights of these supplies overlap).

So, do not have the resources to “reverse”. Therefore, you need to sit down and negotiate a “direct contract”, and then the condition of zero mutual claims will be the key. That is why the Russian party proposes to resolve all disputed issues now, not to go to “war”. But, you need to understand, for Kiev, this approach is unacceptable because of domestic political considerations, which require to demonstrate a rigid and uncompromising, despite the fact that then this “stiffness” is turning into heavy losses for Ukraine.

Dmitry Slavskogo

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