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Orzhel: Russia is tying the enforcement of Stockholm arbitration awards to the continuation of gas transit

30 October 2019

The next political round of the trilateral talks concerning gas transit via Ukraine’s GTS after 1 January 2020 was held in Brussels on Monday.

Negotiation takes place between Ukraine and Russia, while the European Commission acts as a sort of a moderator of these talks, although Ukraine insists that the EU is also interested in preserving our transit, and therefore, it is a full party to the talks.

The previous round held on 19 September was marked by an unexpectedly constructive stance of the Russian party and Gazprom. During the last meeting, Russia again suddenly raised the disputable points: the enforcement of Stockholm arbitration awards and authorization of Nord Stream 2’s construction (which has already been received from Denmark today). The talks still continue, and the next round will be held some time in mid-November.

In his blitz interview to Ukrainian Energy, Oleksii Orzhel, Minister of Energy and Environmental Protection commented on the main sore points of these talks.

According to key members of the Ukrainian delegation, there was an impression after the talks that Russia is trying to exchange the transit contract for the waiver of Stockholm arbitration award. Is that so?

I can tell you that they indeed are tying these issues. Our take is that these issues are not directly related to each other. But that is a subject of negotiation, and therefore, from this viewpoint the situation is not easy. Still, given the understanding of how important the transmission of gas via Ukraine is, I believe that common sense will eventually prevail in the course of talks. We are talking not just about Ukraine but also about European partners, about the security of gas supply to European markets.

Are there any instruments of forcing Russia not to tie these issues into the same package?

Negotiation is that instrument. The talks were very long and difficult, but in my opinion, we have to find arguments during the talks that certain matters could be considered in a complex but others couldn’t. There is a very serious matter at stake: security of supply.

We have the hope that the talks will yield a positive result. Ukraine remains constructive, and Ukraine is fully preparing for harmonization of its legislation with European requirements. Ukraine fully supports the proposals provided by the European party. Our stance is as constructive as it could possibly be. And in view of our stance, we hope that all three parties will come to understand that it’s better to find a compromise.

Is it fair to say that after the last successful round of talks (on 19 September – editor’s note), Russia again reverted to the old rhetoric on 28 October? I cannot foretell whether someone will indeed find themselves at the dead end, because I indeed have hope for the constructive stance of all parties. Will Ukraine insist on a long-term contract?

A long-term contract with clearly defined transit volumes would provide not only an assurance of gas transit but also the confidence in the European market and, over time, in the lower price for European consumers. Considering this factor, we and the European party are in favor of a long-term transit.

Are Ukraine and Europe ready for the transit discontinuation scenario?

Considering the gas reserves stored in Ukraine’s underground reservoirs and in Europe, consumers of conditionally Russian gas are prepared for the halt of transit.

Author: Руслана Чечуліна
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