Ukraine to Remain Key Transit Country for Russian Gas to Europe, Says Šefčovič
Ukraine will continue playing a key role for Europe’s energy security, Maroš Šefčovič, Vice-President of the European Commission (EC) in charge of Energy Union, said on Tuesday, adding that, in his recent visit to Kiev, he saw how Ukrainian authorities are committed to fulfil their obligations and the necessary reforms to modernise the country, pushing it closer to European standards.
Saying he wants to replicate last winter’s unproblematic flows of Russian gas to Europe and adding that he wants to conclude a deal with Ukraine and Russia valid till the arbitration in Stockholm - expected by the end of the summer - he is basically explaining that Brussels does not want to drift away from Moscow, while strengthening its ties with Kiev. In this context, the only problem is that he did not clarify how Brussels could change Moscow’s mind, and force Russia to maintain Ukraine as a transit country for its gas to Europe. He simply said that, in economic terms, it is impossible to skip Ukraine and solely ship gas to Turkey.
“If we will be working with Ukraine on the essential modernisation of Ukraine’s energy infrastructures, this will be the best answer to all those who are skeptical about the future of Ukraine as an important transit country of Russian gas to Europe” Šefčovič said, arguing that the infrastructure used for decades should be used in the future as well.
According to him, Europe stayed put in Ukraine - Brussels will continue supporting the modernisation of Ukraine’s energy infrastructures, backing banks’ investments in the country. He reminded how the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) “signed the first set of loan agreements of 300 million of euros each to support rehabilitation of main east-west pipelines.”
He also praised Kiev for the government’s efforts, despite the difficulties the country is going through.
“We have to give a lot of credit to the Ukrainian government” Šefčovič said, speaking about Kiev’s push for reforms, ranging from campaigns against corruption to reforms of the judicial system.
Šefčovič also threw his political weight to back the liberalisation of key energy assets in Ukraine.
“I know that these new managers in charge of these companies are fully aware of the importance of these steps… Therefore, I am glad that Naftogaz is preparing this process” he explained, saying that the European supports depend on Kiev’s reforms.
On Tuesday, Ukraine's President Petro Poroshenko signed the gas law adopted by Verkhovna Rada on April 9. Law № 329-VIII states that the natural gas market is based on the principles of free competition, proper protection of consumers’ rights and security of natural gas supply.
RUSSIA-UKRAINE-EU TALKS
Finally, during the conference in Brussels, Šefčovič commented on the trilateral talks between Russia, Ukraine and the European Union.
“I hope to have the chance to conclude these talks before summer” Šefčovič concluded, extending the so-called Winter Package till the Stockholm arbitration court will rule on the contracts between Gazprom and Naftogaz, which is expected by the end of 2016.
According to Reuters, Russian natural gas to Ukraine doubled on a daily basis at the start of this month with respect to April.
Despite this temporary achievement, Šefčovič said that there is not yet a date for the next political meeting of Russian, Ukrainian and European authorities.
Last month, gas supply talks with Russian Energy Minister to secure supplies to Ukraine until the end of the next heating season have been cancelled. Šefčovič then said he expected the talks to take place by the end of April. The talks did not take place yet.
SOUTHERN GAS CORRIDOR, ALGERIA
At the beginning of his speech, the European Commission Vice President presented possibilities to diversify gas supplies. According to Sefčovič, the Southern Gas Corridor is progressing on time, and Caspian gas will arrive in Europe by 2019-2020. He also reported that Azerbaijan, Turkey, and Turkmenistan asked Brussels to take a more active role in the construction of the Trans-Caspian pipeline.
“They have been asking the European Commission to play the role of the moderator, to make sure that the Southern Gas Corridor is built on time, that we create good conducive conditions for building the Trans-Caspian pipeline, which will bring these almost unlimited reserves of gas from that region” Šefčovič commented during the Energy Security Conference 2015 on Tuesday.
Earlier this week, the European politician said that Turkmen gas could reach Europe as soon as in 2019.
During the conference on Tuesday, he said that the executive body of the European Union is paying special attention to South Eastern Member States, which are more dependent on Russian gas. Šefčovič stated that those countries will benefit of the European financial support to have access to at least three different sources of gas as soon as possible.
He also mentioned that Miguel Arias Cañete, Commissioner for Climate Action and Energy, is discussing with Algerian authorities instruments to consolidate Brussels’ ties with Algeria, as part of Europe’s effort to diversify gas sources.
Sergio Matalucci
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci