No changes at talks with Ukraine

After Vladimir Putin visited Kiev he commissioned his deputy Igor Sechin to negotiate with the Ukrainian side; Sechin was to meet with Ukrainian deputy PM Andrey Klyuyev. However, no public reports about it have been posted, which makes us assume there is no progress the sides can publicly boast about.

Russia’s position is clear – it is necessary to create a consortium to manage Ukraine’s gas transportation system with Gazprom playing a major role in it. The Russian gas giant needs absolute guarantees of security of gas supplies to the EU. This can be ensured by being a major stakeholder having a direct access to transit pipelines. In this case they can start agreeing on terminating the South Stream project.

Ukraine’s position is less consistent. It does not want to cede its GTS considered to be “national treasure” to Gazprom. Even speculations about a possible transfer of the GTS to Naftogaz with later IPO of the Ukrainian holding are accompanied by statements that the shares can be bought by some western investors, not Russians. However, it is not clear why they would invest in aging pipelines without guarantees of them being filled with Russian gas.

Another argument Kiev is actively promoting is the illegitimacy of the January 2009 gas accord, which should be confirmed by criminal cases against Yulia Timoshenko and her former companions. But this is a double-edged weapon – with such an approach any agreement made by any government, including Azarov’s Cabinet, can be announced void. Although such arguments are weak, Kiev is likely to continue attempts to use them in its dialogue with Moscow for some time.

By Stanislav Mitrakhovich, NESF leading expert