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Ukraine hopes to reach gas agreement with Russia in 1-2 weeks – Energy Minister

Ukraine hopes to reach gas agreement with Russia in 1-2 weeks – Energy Minister
Translated by: Anna Mostovych

Ukraine is attempting to resolve disputed gas issues with Russia through an arbitration process in Stockholm and trilateral talks.

Ukraine’s Minister of Energy Yuriy Prodan hopes that the Arbitration Institute of the Stockholm Chamber of Commerce will adopt an intermediate solution for Ukraine’s gas crisis soon. In addition, a compromise on the controversial gas issue may also be reached through trilateral Ukraine-Russia-EU negotiations,  Prodan told journalists in Brussels on Friday,  October 3, reports UNIAN.

The minister noted that two parallel processes are taking place to resolve disputed gas issues between Russia and Ukraine: the “arbitration process in Stockholm and negotiations together with the European Commission.”

“We have already filed the appropriate documents with the Arbitration Institute of the Stockholm Chamber of Commerce so they can issue a so-called interim ruling — an intermediate solution,” he said.

Speaking about possible time frames, Prodan suggested that a decision may be reached by the arbitration judge in “two weeks, four weeks,” and the compromise decision “may be reached with the Russian side in 1-2 weeks, ” adding that he could not predict which process would have results sooner.

Prodan also pointed to the existence of differences between the parties, “even disagreements among the signers of this protocol.” Today it is difficult to reconcile all the proposals received from the parties. Additionally there are no agreed positions regarding the price setting mechanism and the gas advances. But we can move forward. The European Commission should receive proposals from the Ukrainian and Russian sides by Tuesday on the points that the Ukrainian side finds acceptable from the Russian side. Then the Commission will try to bring us together. Where and when is unknown,” he said.

However, Prodan said he considered the question about what should  be discussed “not essential” — whether it is the interim contract with an intermediate price or a change of contract.

“Today this does not matter. There should be an interim document, but it can consist of changes to the existing contract, or else (this can be) a new contract where all those items agreed to in the compromise reached with the help of the European Commission will be registered in due time, “he said.

Prodan said the review process of the transit contract will definitely take place “because the one we have does not meet European legislation.” In this regard, the minister announced that the Ukrainian side is proposing the creation of an expert group of representatives from the European Commission, Gazprom, and Naftogas of Ukraine.

“This group will reach conclusions about the transit contract between Naftogas of Ukraine and Gazprom as well as the relevant contracts of the Gazprom entities with European gas transport operators. But even now we can say unequivocally that these contracts do not comply with European legislation or the Third Energy Package. That is why there are two paths. Either there is agreement among the three parties and these contracts are changed and brought into line with European legislation, or else we take the legal path, which also complies with European procedures, where the responsible regulator decides whether to change these contracts. This was clearly stated today by the European Commission,” Prodan said.

He expressed confidence that “this will enable us to supply Ukraine through reverse gas that fully covers Ukraine’s needs for imported gas…This includes gas supplies from Slovakia, where there is spare capacity, which is now blocked, in fact, by Gazprom,” he said.

Prodan also said that the necessary volume of needed gas must be pumped to Underground Gas Storage (UGS) in October-November. In addition, he expressed doubt that Ukraine absolutely needs 5 billion cubic meters of gas. “Up to 5 (billion cubic meters of gas) even though this issue is debatable today. But the volume that is optimally necessary for us is around three (billion cubic meters of gas),” he said.

According to Prodan, he is ready to meet with the Russian side “even tomorrow, but our requirements are that everything should be in accordance with European legislation.”

As UNIAN reported earlier, on October 2, at a meeting with investors, Prime Minister Arseniy Yatseniuk said that Ukraine expects an interim decision on the gas issue both from the trilateral talks with Russia and the EU and as a result of the lawsuit by Naftogaz of Ukraine against the Russian monopoly Gazprom in the arbitration court in Stockholm.

The negotiations to resolve the price issue between Naftogaz of Ukraine and Gazprom have lasted since May. On September 26, during talks in Berlin, the European Commission proposed to Ukraine to buy 5 billion cubic meters of natural gas from Gazprom at a prepaid price of US $385 for 1,000 cubic meters for the autumn-winter period.

Gazprom on June 16, 2014, moved Ukraine to a prepayment plan for the delivery of Russian gas, reducing the supply of fuel for Ukrainian consumers to zero and leaving only pumping capacities for European consumers. On the same day, Naftogaz of Ukraine sued Gazprom in the Arbitration Institute of the Stockholm  Chamber of Commerce in order to establish a fair and market price for the gas that Gazprom supplies to Ukraine. Additionally the lawsuit asks Gazprom to return $6 billion that the Ukrainian company has overpaid since 2010.

Translated by: Anna Mostovych
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