The plan for the modernization of the Ukrainian gas transportation system, signed in Brussels, caused mixed assessments in Russia and Ukraine.
President of the Institute for Energy Policy Vladimir Milov believes that Ukraine has found a counterweight to Russia. Director of the International Institute for Political Expertise Evgeni Minchenko doubts that the cooperation of Kiev with Brussels will be effective.
Vladimir Milov: “Putin and Gazprom are disappointed”
All attempts to somehow participate in the modernization of the gas transportation system of Ukraine, made by both Russia and Europe, in previous years were associated with an attempt to simultaneously gain control over Ukrainian gas pipelines. Russia did not directly conceal this goal. European companies representing various EU countries all the time posed the question like this: we are ready to participate financially in this, but we must get some share in either controlling the pipeline or managing it. A couple of years ago in Ukraine, a rather tough law was passed almost unanimously that limited the possibility of transferring control of the Ukrainian GTS to foreigners.
In this situation, in my opinion, a kind of competition arose: who will soon offer Ukraine financing conditions for modernizing the gas transportation system related to the provision of borrowed funds, and not to gaining control over gas pipelines. The conference held in Brussels can be understood in such a way that Europeans, through their financial institutions, decided to simply lend Ukraine in order to get the result, that is, a more reliable gas transmission system, but abandoned the idea of controlling gas pipelines in Ukraine.
Russia has not abandoned such an idea. Moreover, in January, when there was an outbreak of a gas conflict between Ukraine and Russia, Prime Minister Putin said that, in general, Russia was not giving up on the idea of participating in various kinds of consortia to manage the Ukrainian gas transportation system.
Of course, the degree of integration of Ukraine with Europe on strategic issues in the energy sector will increase. I think that Putin and Gazprom may just be disappointed. Because this means that for Russia, the question of gaining control of gas pipelines in Ukraine is now becoming practically insoluble. In fact, Ukrainians have almost solved this problem by raising funds from European financial institutions.
Evgeni Minchenko: “The project will remain a declaration”
Russia hoped that Ukraine would become a unifying link between Russia and the European Union. In Brussels, there was a rejection not just of a specific project – a joint modernization of the Ukrainian gas transportation system. In fact, they said Russia – you are the third superfluous. And this is an extremely unpleasant precedent.
Another aspect is the behavior of the Ukrainian side. Yulia Tymoshenko put her signature on this document. This, as I understand it, runs counter to some agreements that were reached between her and Vladimir Putin during their communication. Another was expected from Yulia Tymoshenko.
I see no threat in the signed declaration for the construction of the South Stream and Nord Stream gas pipelines. Just because the project will not be implemented. Firstly, the amount has decreased – at first 2.5 billion euros sounded, and now 2.5 billion dollars. Secondly, the obligations of the European side were transformed into a subjunctive mood – “maybe we will give some money someday.” Funds for a large-scale project will obviously not be enough. According to expert estimates, the amount needed for the reconstruction of the Ukrainian gas transportation system is five, or even ten times more than the figures mentioned. The same Yulia Tymoshenko stated that another 5.5 billion dollars is needed to increase the pumping capacity.
Plus, there is another very important aspect. The Ukrainian side has not provided objective data on the actual state of the Ukrainian gas transportation system. By the way, this kind of research was carried out, including by European experts. And from the presentation of the Ukrainian government and Naftogaz, which took place in Brussels, it is not clear what exactly the “European” money will be directed to. And this is a matter of principle, because, for example, the IMF still cannot get the Ukrainian government to answer the question, and where, in fact, the money was spent from the first tranche of the fund’s loan.
And the Russian side has recently made very serious concessions to Ukraine. She was sold at an extremely reduced price to 11 billion cubic meters of gas in the underground storage facilities of Ukraine, which belonged to RosUkrEnergo – that is, in fact, they donated about 3.5-4 billion dollars. In addition, Russia refused to impose fines for gas shortages under Ukraine’s contractual obligations. And when after that the Ukrainian side ignores the legitimate interests of Russia (and Russia today, in fact, is the largest donor of the Ukrainian budget, both directly and indirectly), I understand the emotional reaction of both Vladimir Putin and Dmitry Medvedev. In my opinion, it is strange enough that Russia really helps with serious money to the Ukrainian economy, and this is exchanged for a declarative project.
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