Is there, in the European Union, a common gas future with Ukraine?

The European Commission’s decision to grant additional access to Gazprom for the use of the southern branch of the Russian gas pipeline Nord Stream – OPAL, has met with serious concerns in Ukraine. After all, through OPAL, Russian gas will come to the countries of Central Europe, not directly, but through its western EU neighbours, thus by-passing their own gas transmission systems. Polish officials stated that Poland would block the “transfer of pipeline OPAL to Russia” and would submit a complaint to the European Commission, and to the EU Court of Justice, as the gas pipeline, “Yamal-Europe”, going through Polish territory, will lose its significance, and thus, decrease revenues from the transit of Russian gas.

In turn, the negative effect of the decision on OPAL for Kiev, is much more serious and dangerous. Firstly, the growth of gas exports from Russia to the EU via Germany, will reduce transit revenues for Ukraine, in the same way as it will for Poland.

Secondly, a significant reduction of incomes, due to OPAL increased capacity, will have a negative financial effect for Ukraine’s ’s state-owned transmission system operator. A drop in the attractiveness of transit through main gas pipelines and gas storage facilities in Ukraine, will decrease its market value and importance for European consumers.

Last, but not least, Ukraine fears that a decision on OPAL can become a precedent that will open the way for implementation of Nord Stream-2 and – what is even more important – steadily eliminate EU sanctions against Russia.

Therefore, Ukraine considers decision on OPAL but also Nord Stream project as politically motivated, and contradictory to the European solidarity principle with Ukraine. In Kiev, the officials emphasise that the adoption of such a decision, without prior consultation with the Ukrainian side, constitutes a breach of Article 274 of the association’s Agreement between Ukraine and the EU, which provides an obligation for mutual consideration of the energy networks and capacities of energy infrastructure, as well as consultations and co-ordination in the field of security of supply of energy resources.

In addition, the European Commission, which is in the preparation of such a decision, should adhere to commitments made by the EU within the framework of the Treaty establishing the Energy Community, in particular, in respect to relations with Ukraine and other partner countries, the principle of solidarity, and to avoid taking decisions which would breach the anti-trust EU legislation.

For Kiev, it is not only the question of purely economic issues: Ukraine wants to discuss with the EU, about more than just the supply of raw materials, namely establishing a true and reliable energy partnership, which will enhance for both sides, energy security.

What are the consequences of the decision on OPAL, for Europe itself?

Firstly, for the gas companies from France and Germany, who came to Eastern Europe after two waves of EU enlargement, the emergence of a second route of gas supplies, instead of one – a Ukrainian one, can be perceived as a positive sign, but at the same time, egoistic and not properly thought out. After all, such a game with Ukraine today, creates distrust in Kiev. As it has turned out, the main investors in the Ukrainian gas sector will be not the EU’s Engie or E.ON, but companies from the United States, the Middle East, or China, and this represents a complete pan-European failure.

The more the EU indulges with the Russian state corporation, Gazprom, which constitutes, at the same time, the “energy weapon” of the Kremlin, this is, in fact, burying hopes for the creation of real energy security for whole continent. This is certainly an issue which should be perceived as a top priority for both the EU and Ukraine.

Igor Solvey Head of international desk www.lb.ua