Ukraine efforts to bypass Russia met by EU hunt for gas alternative

[Crvena zvezda]

http://www.kyivpost.com/opinion/oped/28425/


Ukraine efforts to bypass Russia met by EU hunt for gas alternative
Feb 21 2008, 01:24



One of the main news developments in January was Yulia Tymoshenko’s statement about the intention to build a new gas pipeline together with the European Union called White Stream, which would connect the countries of Central Asia with those of the EU through the Black Sea and Ukraine.

The idea, which the media attributed to Yulia Tymoshenko, was in fact developed by American experts led by US Sen. Richard Lugar (R–Ind.). The prototype of such a project evolved at the end of the 1990s and was then known as GUEU (Georgia-Ukraine-EU). Although a decade ago, the GUEU received considerable political praise, potential gas exporters and importers were not as enthusiastic about it. The project has fallen by the way side since then. Tymoshenko twice tried to revive the forgotten project: in 2005, during her first stint as prime minister when she tried to develop an energy strategy, and in the summer of 2007, during the international conference of energy issues in Tbilisi.

Tymoshenko’s third attempt to reanimate the project received wide attention because the proposal was addressed to the European Commission, but presented in Belgium without prior agreement from countries in the Caspian region. As expected, European leaders approached the idea with restraint. Energy Commissioner Andrias Pibalgs provided a typically diplomatic response: “We must study this issue in detail, because when the Commission approves and finances certain projects which are technical and economic in nature, it has to be sure that it will continue to support this project in the future.�

The representative of the European Commission was tactfully tight-lipped about the fact that the Ukrainian prime minister’s proposition doesn’t fit into the overall Interstate Oil and Gas Transport to Europe (INOGATE) program of the European development plan for an energy transport infrastructure and the assurance of energy security. This plan is very similar in scope to the Nabucco project which excludes a transport route on the territory of Ukraine.

In the INOGATE plan, Ukraine’s mission in the context of European energy security is quite clear – Ukraine is to supply Russian gas to Europe by means of its own existing gas transport system. The notion of White Stream has every right to exist, but only if the gas pipeline is not perceived as the only alternative means of transit. More economically effective means of transportation are the liquefaction and compressed methods. Experts at Greece-based EXERGIA and UK-based MOT McDonald, two companies involved in the INOGATE plan, agree with this idea.

The reaction of the Turkmenistan Ministry of Foreign Affairs to Tymoshenko’s statement demonstrates that sellers of energy supplies don’t support the Ukrainian premier’s initiative either: “According to internationally accepted procedures, official announcements about projects regarding the construction of international pipeline systems stem from countries which engage in mining energy resources following a series of negotiations and consultations with other interested parties.� As a result, the Turkmen government’s statement implies that it has no need for new go-betweens to sell its gas.

The Ukrainian premier’s initiative comes as a surprise because the government is demonstrating its concern over European energy security in light of its own gas problems. Have we already managed to settle all of our problems regarding the delivery of energy supplies? No, they are still unsettled and soon we are going to have additional problems. Negotiations with Gazprom are scheduled for this month. It’s no wonder President Yushchenko asked the government “not to fix it if it isn’t broken� and not to irritate Russia with statements about new energy projects and tariff increases on the flow of transitory gas on existing routes.

After analyzing the situation, the president’s advisers came to a conclusion that the Europeans will not be pleased with an increased transitory gas rate, since for them this will amount to a rise in energy supply costs. Undoubtedly, the presidential secretariat has already noticed a disturbing trend – Europe is beginning to trust Ukraine less and less and doesn’t believe in stable cooperation with Ukraine.

This became clear on Dec. 7 of last year when it was announced that Hungary was going to take part in the South Stream gas pipe project co-sponsored by Russia and Italy. The agreement was signed in June 2007. For any risks in energy security, Hungary sees the possibility of "just one supplier or just one pipline.� In an attempt to strengthen its own energy policy, the Hungarian government decided to maintain one reliable partner of gas delivery – Russia, but at the same time to take part in the building of a new gas pipeline. In other words, the “new� one is to act as an alternative to the Ukrainian pipeline, from which Hungary gets Russian gas.

So, there you have it – a parliamentary crisis, political instability, a persistent pre-electoral situation coupled with cases of the illegal siphoning of gas from the pipelines. As a result, the Europeans are not so much wary of Russia, but rather the unpredictability of our relations with Russia, more specifically the ramifications of such ambiguity for Europe. Most likely, this is why EU countries take part in the construction of every alternative Russian gas pipeline – both in the South and in the North, thus circumventing Ukraine. This best describes the so-called “exclusive transit potential,� which Ukrainian leaders enjoy boasting about so much.

Isn’t it time for Ukraine to finally settle its own energy security problems? It is Ukraine and not the EU which receives gas from one supplier via one old pipe line, which can easily be shut off by Russia. It is time to diversify both the sources and methods of supplying gas to Ukraine, instead of worrying about the guarantee of European energy security.

To those who complain that Ukraine doesn’t have its own viable projects, the response is: there are such projects. And there are many: beginning with participation in the Nabucco project and continuing with the construction of gas refineries on the Black Sea coast, the gas supplies which can come from Egypt and the countries of the Persian Gulf. However, due to various political machinations, international visits as well as the upcoming presidential elections, the powers that be rarely find the time to deal with such projects.

Leonid Kosianchuk is former director of the Department of Oil, Natural Gas and the Oil Refinery Industry at the Ministry of Fuel of Ukraine.