15:05 05.10.2017

EU offers Russia, Ukraine mediation in talks on gas transit after 2019 - Sefcovic

7 min read
EU offers Russia, Ukraine mediation in talks on gas transit after 2019 - Sefcovic

An exclusive interview of European Commission Vice-President for Energy Union Maroš Šefčovič with Interfax-Ukraine

Question: Gazprom managed to lift a temporary suspension on earlier frozen OPAL pipeline in the end of July. What do you make of it?

Answer: The issue concerns preliminary measures. Now we are expecting the final decision of a European court. It is worth to mention that the gas transit via Ukraine’s territory has increased during the last two years. In recent days, it is at a record high level. It reveals how important the transit via Ukraine is. We are doing all our best to keep this status quo after 2019.

Question: Can the EU point for the sale of Russian gas be changed from the eastern to the western boundary of Ukraine?

Answer: This is a good question. I know that there are very respected European companies ready to closely work with Ukrainian partners such as NJSC Naftogaz Ukrainy and PJSC Ukrtransgaz on various gas transportation mechanisms to guarantee gas transit after 2019. I have said several times that trilateral talks are the best solution to the dispute in a Stockholm arbitration court, if Ukraine is interested in them to guarantee a future gas transportation in the best possible way. Transit mechanisms highly depend on the position and approach of the Ukrainian authorities, Naftogaz unbundling. I know that in this situation European companies are ready to consider any options.

Question: Can you see an interest of European companies to participate in Ukrainian gas transport system management?

Answer: NJSC Naftogaz Ukrainy, PJSC Ukrtransgaz, Snam (Italy) and Eustream (Slovakia) signed earlier a Memorandum of Understanding aimed at jointly evaluating opportunities for collaboration in the operation and enhancement of the gas transmission system (GTS) in Ukraine. I’ve heard about some other companies interested to join the memorandum. The cooperation opportunities were defined, therefore. A key component here is progress in Naftogaz unbundling. We must understand how the final result of this process will look like. Afterwards, we can continue negotiations. I know about the interest in Ukrainian GTS management. The European Commission supports this process since we think that it will allow to keep the transit via Ukraine.

Question: Is Nagtogaz unbundling a key element of energy reform?

Answer: I think it is a significant part of Ukrainian reforms. It is very important to have progress in unbundling for the future of Ukraine’s energy sector. EU member states have experienced similar transformations. As a result, it should increase competitiveness, enhance economy and improve energy system capacities.

Question: The Nord Stream gas pipeline is under repair again since September 11. The gas is now traditionally transmitted through Ukraine. In the case of Nord Stream 2 construction, Ukraine will not have a reason to keep its huge transit capacities standby . What will Europe do? Under such circumstances Ukraine will not be able to back Europe after yet another malfunction or repair of Nord Stream.

Answer: Gas transportation through Ukraine is proved to be important today. Because of Nord Stream gas pipeline repair, Ukrainian GTS is transmitting more gas. We emphasize this all the time: the EU cannot have only two routes instead of three (Ukraine and Nord Stream). We cannot ignore a big gas transmission system being constructed for many years in Ukraine. Therefore, our priority is to keep available gas transportation routes after 2019. What we mean is to have commercially viable volumes of gas transition. We understand that there is a need of a good business case to maintain such a system. And we want that the route via Ukraine would be commercially viable and operational. As I’ve said before, there are at least two companies ready to work with Ukraine in GTS management. I am confident that if Naftogaz unbundling moves forward, these companies will be able to take part in GTS management project. Then we can ask international financial institutions, such as EBRD, World Bank, for financial help to modernize and improve the GTS.

Question: Does the EU need Nord Stream-2 to ensure sufficient gas supply?

Answer: When talking about Nord Stream-2, we mentioned that in our opinion this additional gas transportation capacity is not necessary. We see this project implemented because of five companies’ commercial interest as politically sensitive. It is often discussed at a very high political level in Europe. Thus, we asked for a mandate for negotiations between the EU and Russia on the essence of the projects, its correspondence with the EU legislation and on other aspects. We want to be sure that the project will respect the fundamental principles of the European law.

Question: Will Ukrainian GST remain one of the main gas transportation routes for the EU despite Nord Stream-2 implementation?

Answer: It is important for us to have a viable transit route through Ukraine after 2019. We think that commercial deals on gas transit expiring in 2019 should be prolonged. They should envision commercially viable volumes. We would be pleased to see a deal between Russia and Ukraine and their companies. But as I’ve said, we are ready to be a mediator for this matter, as it was in the past. The EU is ready to reaffirm its interest in a transportation route through Ukraine if both sides are willing to talk in a trilateral format. Moreover, we are ready to provide our know-how, and European companies are ready to be part of this.

Question: According to the last decision of the European Parliament, the European Commission has the right to ask gas companies for details of big deals which affect energy security of EU member states.

Answer: We should talk here about decisions significant for energy security. The first one is about transparency of interstate treaties on gas supply. Now the European Commission must check whether such agreements fully respect EU legislation since, as we know, it is not always a case. The second one is about energy supply security. It means that if the company is dominant on a national market having more than 28%, its contracts must be scrutinized by a national regulator and by the European Commission afterwards. We think that this is a very useful tool, and we going to apply it when necessary.

Question: Does the EC feel the need to ask for such details now?

Answer: Now we feel comfortable, and we do not see threats in gas supply. Our supply sources are diversified. We are more connected, and we utilize gas storages in a more efficient way. Moreover, LNG (Liquefied Natural Gas) has more importance for Europe now. We are better off now than 2-3 years ago. At the same time, we are ready to apply a new tool we have and ask for data we need when necessary.

Question: According to Ukraine’s energy ministry, a consortium of three energy companies – Westinghouse Electric Sweden AB, Polenergia International S.ar.l. and EDF Trading Limited are planning to participate in the implementation of the Ukraine-EU Energy Bridge project (to export energy from Khmelnytsky nuclear power plant to the EU). What can you tell us about this project? How does the European Commission see it?

Answer: The idea of such a project appeared more than a year ago. But we need more information. We have not yet received answers to our questions about commercial viability of such a project, security issues.