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Focus Turns To Gas Monitors In Russia-Ukraine Gas Dispute

January 09, 2009
By Bruce Pannier

Despite early predictions that natural-gas flows would resume as early as January 9, Russia's Gazprom and Ukraine's Naftohaz remain at odds over a deal to restart shipments to customers in Europe.

Once the gas is back on, it will take between 30-36 hours for volumes to be restored to delivery levels last seen on December 31 -- the day before a pricing war sparked the current gas standoff between Moscow and Kyiv.

But EU monitors are already in Kyiv, preparing to ensure that the shipments, once resumed, are delivered in full. Russia halted the gas flow to Europe amid accusations that transit country Ukraine was siphoning off supplies, a claim Kyiv denies.

The EU monitors, it is hoped, will end the volley of accusations and ensure that Europe spends the rest of what is proving a brutally cold winter with no further drop in supplies.

Little so far is known about the monitors' mandate. Russian Prime Minister Vladimir Putin on January 8 said he did not wish to see a group of monitors descend on Kyiv "to sit in hotels and drink horilka," or Ukrainian vodka.

"We are ready to admit these [EU] monitors on our territory," Putin said. "Of course, they also should be stationed on Ukrainian territory and at the stations through which our gas goes out to Europe, at all the major pipelines."

Details Still Unclear

Since there is little experience in deploying international monitors to keep track of gas flows to the EU, Ukraine and Russia have been left to finalize the terms for the EU mission.

In addition to basing monitors at the eastern and western border points in Ukraine, Gazprom has also asked that monitors should check if gas is being diverted into underground storage areas in Ukraine's western regions. It is also eager to see monitors positioned at compression stations along the pipeline route, to check that volumes remain consistent.

"For the moment we lack further details. Official statements only say that they [monitors] will be put at key locations inside Ukraine, but there are no further specifics," says Federico Bordonaro, a Rome-based energy analyst.

"Of course they will have to monitor whether the gas is actually flowing to Ukraine from Russia, they have to monitor how and when and where the gas leaves Ukraine for European markets," he adds. "For the moment, I think there are still many details that need to be disclosed by the European authorities."

Ukraine and Russia appear to be ironing out an agreement that would allow Russian inspectors to travel to Ukraine, and Ukrainian inspectors to Russia, for additional monitoring.

Volodymyr Trikolich, the deputy head of Naftohaz, said at a news conference in Kyiv that in recent days, Gazprom officials have prevented permanent Naftohaz staff based in Russia from reporting on pipeline activity to their superiors in Kyiv.

"There are agreements and contracts between [Naftohaz and Gazprom] that our representatives are permanently based at their facilities and theirs at ours," Trikolich said.

"We have no complaints, our representatives are there, but [Gazprom] does not let them use the phone to tell us what's going on there," he added. "And they do not want to communicate with us. This is the very first time this has happened."

Gazprom CEO Aleksei Miller told Russian President Dmitry Medvedev that his company was prepared to resume gas shipments to Europe today if all the proper documents were signed. It is not clear whether that will happen, however.

Who's To Blame?

Bordonaro says that while an agreement to resume gas supplies will be welcome, it does not mean full power will be immediately restored in many of the countries currently experiencing problems.

"We have to keep in mind that even if this agreement gets confirmed and these monitors will actually be able to monitor the crucial locations inside Ukraine, some countries -- for example, like Bulgaria -- that are totally dependent on Russian gas supplies for their heating, they will not be able to fully restart their energy system for some days because things cannot be restarted in just a couple of hours," Bordonaro says.

"And also official statements by Europeans this morning were cautious because even though there was optimism, one official said, for example, that it could be a matter of a couple of days before everything restarts properly. So the next few days will be dramatic for some countries."

Bulgaria and other Balkan countries, which are entirely dependent on Russia for their natural-gas supplies, have been forced to switch to alternative fuel sources and rationing schemes to survive a week of freezing temperatures.

This latest Ukrainian-Russian row has been a sobering reminder to the EU of the pitfalls of relying on gas from Russia. Bordonaro says Ukrainian President Viktor Yushchenko may be the one to bear much of the blame due to his hard-line stance on negotiating with Russia, which "has not paid off."

But Bordonaro adds that the EU can easily spread the blame around.

"In the industry market, in the Ukrainian energy market, I think that Naftohaz has not emerged as a particularly reliable player for Europe," he says. "Even so, Europeans tend to accuse Gazprom, and they have good reasons for doing that, because we should not forget that the Europeans have already paid for that gas and that the Russians must respect their contractual duties."

Source: http://www.rferl.org/content/Focus_Turns_To_Gas_Monitors_In_RussiaUkraine_Gas_Dispute/1368325.html

Copyright (c) 2009. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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