Ukrainian GTS, no agreements so far

Two weeks before the New Year more rumors are coming from Kiev about an alleged compromise on the natural gas issue that Ukrainian negotiators have managed to achieve. According to materials published in the Ukrainian press, the country will provide Gazprom a possibility to enter two joint ventures that will deliver natural gas to Ukraine and transit it to Europe in exchange for halving the price of Russian gas for Ukraine.

The problem is that at first it is planned to allocate 50% in the JV to Gazprom but then about 33% like Ukraine and European companies to be possibly invited to join will have. But Gazprom and Russian political authorities want something different – at least 51% in the JV (consortium) while the other part of the shares can be divided between Naftogaz (or its successor), German, Italian and French firms. A similar scheme is employed in the South Stream project that the Russian side considers a role model.

However, ceding 51% in the pipeline system is the move Ukrainian elites view as absolutely impossible. All speculations about handing over control over the pipeline system finish with claims that “the Sun is more likely to fall on the Earth than the GTS is to be ceded”. But in this case rumors about gas concessions will remain just rumors. In this context Alexey Miller’s words that “[Kiev] will not get New Year gifts” are understandable.

By Stanislav Mitrakhovich, NESF leading expert