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Ukraine To Consider Plan B, If Gazprom Deal Fails

Ukraine gas

Ukraine is considering alternative ways to use its transit network should it fail to strike a new gas transit deal with Russia’s gas giant Gazprom when the current one expires at the end of 2019, Ukraine’s deputy minister for foreign affairs, Olena Zerkal, said on Thursday.

“We’ll have to think about making the network more commercially viable -- such as through reverse flow. We need a Plan B, a Plan C and a resilience plan,” S&P Global Platts quoted Zerkal as saying at a gas conference in Berlin.

Ukraine aims to keep its gas transit network like it is, but if Russia significantly reduces gas transit or stops it because of the Nord Stream 2 pipeline to Germany, Ukraine will need alternatives, Zerkal said. Ukraine is hoping to reach a new gas transit deal with Gazprom from 2020 onwards, but Gazprom has shown “no appetite” for talking about post-2019 gas transit brokered by the European Commission, the Ukrainian diplomat noted.

Ukraine, which earned around US$3 billion in fees for the Russian gas transit last year, holds fast to claims that the Gazprom-led Nord Stream 2 gas pipeline project poses a threat to European unity and to Ukraine.

The highly controversial Nord Stream 2 pipeline project will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. EU institutions and some EU members such as Poland and Lithuania are against it, but one of the leaders of the EU and the end-point of the planned project—Germany— supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand.

Related: Stranded LNG Tankers Point To A Major Problem In Gas Markets

If Nord Stream 2 becomes operational, it would be a threat to Ukraine, according to Zerkal.

“Based on the experience we have with Russia and our relations with Gazprom, for Russia gas is not a commodity. It is a political tool they use to threaten partner countries,” S&P Global Platts quoted Zerkal as saying.

Ukraine is proposing a 70-percent reduction of its tariff to Gazprom, she added.

By Tsvetana Paraskova for Oilprice.com

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  • reality check on November 09 2018 said:
    Ukraine is proposing a 70% reduction of the transit tariff to Gazprom?

    Sounds like Ukraine has been blackmailing Russia with onerous fees, not the other way around.
    PS: That's what corrupt gatekeepers have done throughout history, so let's not act surprised.
  • RussianJew on November 09 2018 said:
    It is the second piece I see today on oilprice.com that I can't make sense out. So what is "plan B" Ukraine considers?! Its whole gas network was built to deliver Russian gas to them and to Europe. They consider themselves at war with Russia and for those $3 billions a year give Russia and EU nothing but headache. So in a year Russia and Germany and Turkey will make their outdated gas network obsolete and useless.
    So the plan B is what? To sell "EU gas" to Russia?
    I am asking only because I didn't find any hints in that piece of "news" or whatever it is.

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