Trilateral Negotiations Needed To Guarantee European Energy Security

By transferring its gas to European consumers at the Russian border with Ukraine, Gazprom would lose an opportunity to threaten Europe with termination of supplies via unfounded accusations about alleged unauthorized activities by Ukraine.

"Acquisition of Russian gas by European companies on the Ukraine-Russia border would allow them to administer their gas on the territory of Ukraine using Ukraine’s considerable underground gas storage facilities. In turn, Ukraine would have direct relationships with European gas network operators. Such a transit structure could be beneficial for both parties," Board Chairperson of Naftogaz of Ukraine Andriy Kobolyev said.

Naftogaz of Ukraine repeats that endorsement of the Ukrainian law 'On Sanctions' will not mean automatic introduction of measures against Gazprom or any other persons or companies. The law creates legal grounds for the application of sanctions should such measures become absolutely necessary.

Transfer of the point of gas acquisition from the western border of Ukraine to the western border of Russia would not only mitigate potential risks of sanctions, but would also bring contractual gas transit relations in line with the terms of the European Union’s Third Energy Package, which is to be implemented by Ukraine by 2015. Such a decision would be fully in line with the rules of the European Energy Community, which Ukraine joined in 2011.

Naftogaz of Ukraine respects European buyers’ long-term Russian natural gas contracts and understands that amendments require time and careful negotiation. At the same time, the company notes that the current situation cannot be considered stable. The possibility of a crisis similar to 2009, when Gazprom terminated gas transit to Europe, cannot be ignored.

First of all, the termination on June 17 of this year of the agreement on balancing of gas consumption between Ukrtransgaz and Gazprom Export makes it impossible to use gas from Ukrainian underground storage to cover consumption peaks in the EU.

Secondly, the absence of direct Interconnection Agreements between Ukrtransgaz and the gas transport system operators of neighboring counties invalidates standard balancing procedures. Gazprom Export has such agreements despite the provisions applicable in the EU. Thus, the Russian company monopolizes control of transportation and sale of gas at the eastern borders of Europe.

As a reliable transit company, Naftogaz of Ukraine considers it necessary to warn its European partners about possible risks and suggests tackling the issues jointly through trilateral negotiations between Ukraine, Russia and the EU.