Ukraine, Russia start new talks to supply gas to Kiev

BRUSSELS, Belgium – Ukraine and Russia launched EU-brokered talks in Brussels on Friday, March 20 aimed at supplying gas to Kiev through next winter and securing onward deliveries to Europe.

A deal to ensure supplies for the current winter expires at the end of this month, and that agreement was only agreed after tense negotiations against the backdrop of the war in eastern Ukraine.

The new talks involving the Ukrainian and Russian energy ministers as well as the EU energy commissioner laid down the basis for continuing the discussions in April, a joint statement said.

“The parties agreed that preparations for the supply for the next winter have to start now,” the statement said.

Russia will consider a request to grant Ukraine a discount and Ukraine will seek to purchase enough gas to fill its storage tanks while ensuring transit of supplies to Europe, it said.

The European Commission, the powerful executive for the 28-country EU, will do its best to help cash-strapped Ukraine find “adequate financial support to purchase gas,” it added.

An EU official said earlier this week that Brussels has set June as a target to clinch a new gas deal.

Deal has days to run

With a deal for the current winter expiring at the end of March, Ukraine can ensure its gas supplies in the intervening months through reverse flows from EU states.

But officials added Russian gas imports will be needed to replenish reserves to the level of 20 billion cubic meters, the quantity needed to secure both supplies for Ukraine and the transit of gas to EU countries through next winter.

About 15% of Europe’s gas transits Ukraine.

The EU hopes the deal it will end up brokering with Russian Energy Minister Alexander Novak and his Ukrainian counterpart Volodymyr Demchyshyn will last through the autumn of 2016.

That is the date, the EU official said, when an international arbitration panel in Stockholm is due to rule on a dispute between the two sides which erupted after the Ukraine crisis.

After a pro-Russian leadership was ousted in Kiev and was replaced by a pro-Western one, Russia decided to increase the price of gas sold to Ukraine.

Moscow then halted deliveries in June when Kiev refused to pay the increase, but they resumed late last year when the EU brokered a deal to ensure supplies through the winter.

The deal risked coming apart when Moscow threatened at the end of February to halt deliveries to Ukraine and divert stocks instead to the eastern parts of the country controlled by pro-Kremlin separatists after Kiev cut them off.

But the dispute was resolved in an agreement on March 2 that was brokered by Maros Sefcovic, European Commission Vice-President for Energy Union, who chaired Friday’s talks.

“We have held a constructive first meeting on the follow-up to the Winter Package,” Sefcovic said in a statement after Friday’s talks.

EU foreign affairs chief Federica Mogherini added: “I hope an agreement acceptable to both sides can be found soon, which may contribute to reducing the existing tensions in the energy relations between the two countries.”

The EU said the next talks were scheduled for next month. – Rappler.com