Tatsiana Manionak: Russia might face excess of gas if Ukraine doesn’t buy it

New Ukraine authorities by all means are aiming at having transparent market conditions for formation of gas prices formed by non-market methods.

Ukrainian events demonstrated Europe’s dependence on Russian gas to the whole world. And even though the EU is aware about this threat and is looking for ways to get rid of gas dependence, it is not that easy. However, the EU has defined its priorities and is moving towards them.

And meanwhile a gas war broke out between Russia and Ukraine: the two sides filed lawsuits to Stockholm arbitration.

What inflamed the gas conflict between Russia and Ukraine? Does Ukraine have a chance to win this gas war? Does Europe have a plan of how to stop being dependent on Russian gas?

Tatsiana Manionak, an economic expert at “Belarusy i Rynok” economic weekly, answered the questions of “EuroBelarus” Information Service.

- If we recall the events of 2009, then we’ll see that the current gas war has its specific features. Ukraine’s government is by all means aiming at getting transparent market conditions for formation of gas prices. Personally, I wouldn’t call gas contradictions a war; gas is being transited to Europe smoothly.

Ukraine’s government has been preparing for such situation and pumped about 14 billion cubic meters of gas to the storages. Such stock, bigger production of Ukraine’s own gas and fierce savings will enable Ukraine to hold on for several months, or even till the end of this year. To provide uninterrupted gas supplies to Europe Ukraine has to pump about 17 billion cubic meters of gas.

There are no anticipated problems with gas supplies to EU countries. However, if the situation worsens, there is a possibility to switch to gas supplies through Nord Stream, though it violates the EU’s instruction No.3, which restricts gas supplies through this gas pipeline.

There are two gas pipelines at the Belarusan territory: Beltransgaz and Yamal–Europe-2, which originally belonged to Russia. It is a mistake to think that Belarus can earn money because of problems with Ukraine’s transit.

There will be one more trilateral meeting between EU, Russia and Ukraine in June, where prices on gas will be discussed. It should be noted that Ukraine takes quite principal stance and is ready to defend it, and that is why Naftogaz filed a lawsuit to Stockholm arbitrage asking to establish a fair market price for gas sent by Gazprom to Ukraine.

Gazprom was the first to file a lawsuit against Naftogaz, demanding to pay a debt of 3.5 billion dollars because Naftogaz didn’t perform its obligations. But Stockholm arbitrage can take a year or two.

In the near future South Stream won’t start working; but Europe needs Russian gas, too. Its goal is to stop being dependent on Russian gas by 2015.

Ukraine is also interested in resolving the problem at the negotiating table; there is still time for bargaining. Russia has nothing else to do but to negotiate. In this war, apart from economic losses Russia is also losing its image: Ukraine is the second biggest buyer of Russian gas after Germany. Gas agreements with China will start working only in four years, and Gazprom is to face a problem of what to do with gaz.

- Does Ukraine have a chance to win in a gas war, i.e. to win a lawsuit in Stockholm arbitrage?

- There are no such cases in history. A lot depends on which basis the case will have – political or economical.

Ukraine might win the court; however, Stockholm arbitrage might insist on fulfillment of Ukraine’s obligations.

Gazprom is sure that it will be able to demand the principle “take-and-pay” to be fulfilled. However, other countries violated this principle, but Russia poses no claims against them.

Gas price for Ukraine is not a market price. Gazprom is a monopolist, and usually the rule “the more you use the less you pay” is working. Ukraine is the second largest gas consumer after Germany, so the price shouldn’t be higher than that for Germany, too.

- Ukrainian events is a sign for Europe that it is about time to get rid of Russian has dependence…

- It is not even the first sign. Europe is aiming at diversification of gas supplies and gas suppliers. Unfortunately, it is not that easy to get rid of monopoly. However, Europe already has a gas market; it has set clear goals and is moving towards their implementation.