Russia and Ukraine are currently preparing an intergovernmental agreement in the gas sector and have reached an agreement that Russian companies will participate in the upgrading of Ukraine’s gas transportation system, Russia’s Energy Minister Sergey Shmatko said in Sofia, responding to a question from New Europe.
“Now we are preparing an intergovernmental agreement between Russia and Ukraine in the gas sector, including Russia’s participation in the refurbishment of Ukraine’s gas transportation system. We have reached an agreement that Russian enterprises without any limitations will be able to participate in this process,” Shmatko told a briefing in the sideline of an energy forum on the Natural Gas for Europe: Security and Partnership in Sofia. “I have no questions with respect to this document. We don’t know to what extent this document will be feasible, but the fact that we will participate in the refurbishment of the system is a sure thing,” he stressed.

Russia had a very strong reaction about the agreement between Ukraine and the European Union about the refurbishment of the Ukrainian gas infrastructure, which initially excluded Russia. “I participated in this process and my impressions are that we spent more than two hours in the presence of very wellknown politicians and business people with serious experience about the cooperation between Eastern Europe and Western Europe. For two hours we discussed strategic cooperation between the European Union and Ukraine in gas delivery and in these two hours none ever mentioned the name of Russia,” Shmatko said.

Transit troubles

He reminded that Russia has concluded direct agreements with the European consumers and has assumed all the responsibilities of transit risks and faces possible damages if gas supplies are disrupted and the EU and Ukraine had drawn up documents without Russia’s participation. “Why was even Russia invited to discuss such documents? From my point of view, these activities of the Brussels conference were very political. We saw it clearly when on bilateral talks we started to discuss these issues with Europe, with Ukraine and it turned out that none of these parties had any idea that Russia should not be a partner in the modernisation of the gas infrastructure in Ukraine and today we managed to solve all these problems,” the Russian energy minister said. “We know now the position of Ukraine, the position of European Union and now we understand that these problems had to do with insufficient level of preparation for discussion and now all interested parties, all stakeholders have expressed the need for Russia to participate in the reconstruction of gas transportation system of Ukraine,” Shmatko said.

Russia and the EU are also competing over their respective South Stream and Nabucco pipelines although both parties often state the opposite. Asked by New Europe about the future of the two projects, he said South Stream is much further down the line in terms of preparation than Nabucco.

Nabucco vs. South Stream

“We started discussing these issues of competition between Nabucco and South Stream at a very early stage. These issues should be discussed at a professional, expert level when the feasibility studies are ready when the exact starting points and final points of Nabucco will be defined because we still don’t know these things. That’s why I say we’re not afraid of competition with Nabucco. We’re sure and confident we have all the necessary things to successfully implement our South Stream project,” Shmatko said. “We’re getting close to the end of the negotiations process with all the stakeholders in this process. We’ve already signed most of the intergovernmental agreements; we’re discussing output agreements that will be signed soon. We also have all the resource bases for this project. I would also like to remind you that, contrary to many other alternative corridors that are very popular today to talk about, we’re the only one ... to have an independent review as to the availability of resources for tens of years ahead,” the Russian energy minister said, adding that Russia would be able to offer a lower price compared to Nabucco. Russian Prime Minister Vladimir Putin cancelled his appearance at the summit at the last moment the reason being, according to media reports, Bulgaria’s refusal to allow Russia to use its national pipeline for the South Stream project. But Shmatko reminded that there is a signed political agreement between Russia and Bulgaria on cooperation on South Stream signed by top-ranking Bulgarian authorities. “For me there is no question about whether there will be or will not cooperation between Russia and Bulgaria on South Stream. The fact that today there are two issues that need further clarification between Gazprom and the Bulgarian energy holding shows that these two companies will have to work more actively with each other and implement the political agreements signed by the leaders of the two countries,” Shmatko said ahead of Bulgarian Prime Minister Sergei Stanishev’s visit to Moscow. “We’re talking about the use of the gas transportation system and the diversion of some of the existing streams to the South Stream that have clear cut corporate character,” the Russian energy minister told the briefing in Sofia. “First, we should comply with existing agreements and corporate disputes should not be in the way of the implementation of political agreement of heads of state so I’m sure that in the near future these documents will be concurred and signed.